Robinhood's CEO on the future of finance and where crypto fits

Transcript

DM. Good morning. Welcome to the Milk Road Show, the daily crypto show where we give the underdogs the playbook the big dogs don't want you reading. I'm your host Jay Hamilton. It's Monday, March 31st, and crypto isn't the only one disrupting finance. So are FinTechs as they aim to use technology to disrupt the banks, the dinosaurs. It's not just the rich that should get richer. All humans deserve access to financial wealth and financial products and financial freedom. So today we're joined by Vlad Tennv, co-founder and CEO of Robin Hood to discuss his vision for the future of finance and the role that crypto plays within that. Grab a glass

of milk, folks. This one is going to be a good one. Before we jump in, are you guys swapping? I know you are. I know you're trading tokens. And if you are, you're going to want to check out Milkroad Swap. Why? One simple reason, some of the lowest fees you will find anywhere. If you're swapping on Uniswap, you're paying 25 bips. If you're swapping on Coinbase, you're probably paying 50 to 120 bips. If you swap on Milkroad Swap, you're only going to pay 15 bips. And you can also swap on Salana. You can swap on ETH, swap on Bass. Check the link in the show description. Get in there now. Swap on Milk Road Swap. You won't be upset.

Today's episode is brought to you by Moon Pay. Trade crypto free, fast, and on your own terms. It's also brought to you by Coin Shift, powering top crypto treasuries with their yield bearing stable coins, CSUSDL. Without further ado, Vlad, welcome to the Milk Road Show. Thanks, guys. I love it. Yeah, I think uh is there any are there any land of milk and honey jokes or if you if you've got one, I'm I'm all ears. Yeah. Well, uh I'll keep it in mind. Okay. So, I I kind of want to frame this conversation today. Uh, as Kyle and I were prepping for this, we were talking about it sort of feels like as if we were to sit down with Apple in 2000 and

ask what they saw as the future of the internet and the future of access to information and technology. What would have what would they have seen? That feels like the moment where Robin Hood is at right now is really looking beyond where we are currently into what's the future of finance not just in America but around the world. So I want to start from a high level as to what's what's your vision for for Robin Hood but also where you see finance going. Yeah. Uh, I think that we're in the midst of profound societal change, both technology change, but also cultural.

For a very, very long time, people relied on institutions and experts for everything from their information to fitness tips to education, learning stuff to financial services. And I think there's a big shift away from trusting institutions and third parties to do that for you to now us as individuals having the tools and capabilities to do that ourselves. And so there's a shift away from trusting institutions to trusting ourselves and our peer networks. And of course, Robin Hood is

mostly concerned with the financial aspect of this, but it's more than financial. I mean, you see it in media where, you know, it's going from newspapers and like centralized uh media into uh social and and that's had a transformative impact. I think I think in financial services you're seeing a big trend toward people self-directing. Um and you know not not to say that people will always self-direct or everyone will do it but uh even in the case where you have an adviser that adviser will advise you and the individual has the tools and and power to to be in charge.

There's going to be uh upwards of 124 trillion that's going to be changing hands. 124 trillion dollars going from older generations like silent generation and baby boomers down to Gen X millennials and and younger generations. And this is going to be the largest transfer of assets in human history. And so it's going from people that had a different way of thinking. They they relied on brickandmortar institutions. They relied on others to tell them how to manage their money into folks that are much more self-directed. Um they they care about different things. And

there's two technologies that are happening alongside this gigantic asset movement, cryptocurrency and AI. And so it's a period of of incredible change. And I think Robin Hood is positioned right at the center of that. You're seeing changes due to AI changes toward from people self-directing more. Cryptocurrency is is going to change the entire financial system. And there's going to be profound impact to how people think about their finances. But the the upshot of it is it's going to end up with individuals having much more control over capital flows and their own finances than than

ever before. So you guys made some big announcements this week. Uh for those of our listeners who aren't up to speed on uh on this, how does Robin Hood play in this vision of the future of finance and crypto and this merger of technologies? what role are you going to play and how are people going to take advantage of this by being part of Robin Hood? Yeah, so last night at the gold event basically we outlined the vision of giving you each individual your own financial team. So if you think about where the wealthy high netw worth individuals are right now, a lot of them

have their own financial teams. They have family offices that manage every aspect of their financial life. They have a financial advisor. They have a private banker in most cases. They have people helping them with investment research. All of their financial needs are met so that they could spend their free time, you know, do doing other things, adding value and however they'd like to add value. A lot of them are entrepreneurs. They're running businesses. Some of them are investors and they're making investment decisions themselves. Um, but yeah, their their family offices are kind of managing things for them and and so that they

don't have to worry about and they can spend their time doing what what they what they feel is the most productive. And what we're outlining is how can we give every individual the power of their own financial team? And we outlined what we called three financial experts that we're going to put in your pocket. Your investment advisor via product called Robin Hood Strategies, your your research research assistant uh which is an AI powered product called Robin Hood Cortex and your private banker Robin Hood Banking. And I think this is really just uh the next step in giving everyone access to the same types of tools and

capabilities that high netw worth individuals have access to today. Yeah, it's it's so exciting to think about the the opportunity to bring to democratize finance so that the average person, the normal person with a small subscription of $5 a month or 250 I think per year was the uh the high-end gold subscription uh can can have this team behind them now which only only the wealthy have had access to. I mean, it's it's so interesting how the vision and the mission of of Robin Hood really in many ways align with the ethos of crypto which is to bring financial access to to

the world to the globe and not just leave it to the wealthy or to certain countries where we have established banking systems and as a result you can get access to these other products that maybe aren't available to I mean there's what over three billion people who don't have access to a bank account in the world today. Like that's that's a problem that we need to to solve. When when you think about the thing I'm trying to wrap my head around, who who are Robin Hood's competitors? Like are you competing with banks? Are you competing with Coinbase on more of like the crypto side? Are you just in your own category that you're creating on creating now moving forward? Who do you see as your competitors? Yeah, I mean

honestly we don't think about competitors too much because I think you can get wrapped up in I mean for a couple reasons. One is you could just get wrapped up in a quagmire of just paying attention to what other people are doing and not focusing on your business which which I think is actually the biggest trap. The second one is we just have if I looked at the traditional definition of competitors we'd have so many of them that it would get very very distracting. Right? You have the traditional brokerage houses, you have the NEO brokers, you have the crypto companies. I mean to some degree with prediction markets, we have, you know, all all the folks engaged in like sports. Um, so yeah, it's it's a broad

swath and I haven't even mentioned the big banks as well as the small and mediumsiz banks. Um, and uh and you know uh all all the other companies. So I I'd say the scope is all financial services. The long-term vision is that we want to be the place that serves all of our customers dollars. So if uh we want to be the place where you can buy, sell or hold any financial asset or conduct any financial transaction. Um we have a credit card that that's a very compelling product. You know, 3% cash back on all categories. I think it's the best credit card on the market. We're accelerating the roll out of that, but that's been very popular. Yeah, we much

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I I the reason I ask and Kyle, I'll get you to jump in here because I know you're working on uh some reports and some writing here of this concept of like what happens if we combined like a bank, a fintech company and a payments company. We've never really seen that before. Like financial services companies have often operated in their own lanes and we're it seems like Robin Hood is doing something that we haven't seen before. Yeah. And I I think crypto also adds another dimension. Not a lot of the traditional. I mean, some some consider me like a Tradfi person when I go on these shows, right? Like, do you consider you a Trafi person? Uh, no. I think I think it sounds like an insult to me. I don't know. Oh, really? Um, but uh, you know, you mentioned crypto and

we got into crypto relatively early, I think, from by by Tradfi standards. We launched our crypto offering in 2018 and you know a lot a lot of the same things that I'm saying now about how there's a huge shift from institutions to individuals and peer networks we said back then in that launch uh launch announcement you know I was I was reading over it and kind of it was remarkably relevant even today where we outlined the reason we got into crypto is because our mission was to democratize finance for all and crypto fundamentally as an asset class has the has the possibility of reorganizing the

entire financial system and putting power that was normally reserved for institutions into the hands of the people. That's how we got so excited about it. I think one of the the really interesting things of what Robin Hood's doing is you guys are bringing everything into one into one spot, right? Like you started with stocks and then it was crypto and then it's commodities and then there's gold there and now there's prediction markets and now you have a bank bank account where you can kind of get yield on your dollars. You got credit cards. You're kind of like bringing everything into into one spot which to me is super excited. My one question is I went on my phone actually to download Robin Hood the other day because I was like well it doesn't you know I'm Canadian and I

wanted to get it right and it does exist here. And one of the big things, at least in the crypto world, the the big ethos is democratizing it for everybody in the world, right? Jay said there's three billion people in this world that don't have access to any financial services. Is that part of your strategy as well? Like obviously your strategy has been let's just get everything into one app that people can trade. But most of it has been in the US. In the future, let's say I don't know was a year, five years, 10 years, like what's the bigger vision? Is it expanding globally or like how does that work? Yeah. And I outlined a little bit of this uh we did an investor day New York back in December.

So there's really three arcs of our business that sort of like climax over different time periods. The first arc is being number one in the active trader market. And that's the one that we're kind of in the heyday of right now. And that that's really why we launch products like futures, like prediction markets, um index options for instance, and Robin Hood Legend. But updates that we make to our product for active traders basically immediately translate to more revenue and more business value. So we're very much in the active traders arc of our business. Longer term, I'd say our, you know, five-year arc is being number one in wallet share for the next generation. And that's where things

like Robin Hood strategies and Robin Hood banking come in. How can we be the place that if you're a Robin Hood customer, um, makes it a no-brainer to put all of your dollars and put all of your transactions through our platform. So, that's sort of like a medium-term arc. Our long-term arc is building the number one global financial ecosystem, and that's where crypto plays a big role. Also our acquisition of trade PMR which allows us to become an advisory platform and really being the number one global financial ecosystem uh requires us expanding across two independent axis. One is retail only to business and institutional and the other

one is US only to fully global. So, so that means making available everything that we have to all types of customers all over the world. And I think this is aided by having a unified infrastructure and technology platform. So, it's not like we have to go and launch new products and have new brickandmortar offices in all of these countries. If we build the technology from the ground up like we are doing with global expansion in mind, it can just be as simple as dropping our app in app stores. And that's the vision. Of course, there's country specific localization, there's regulations, there's like different funding rails to move money in and out

depending on the market. But by and large, we'll get to a place where launching in an additional country is is is hopefully as easy as possible, trivial for us. So, right now, uh, we're not in Canada yet, unfortunately, even though I love Canada and the Canadian people, and, um, I I would love to be there at some point. So, hopefully we won't have to wait too long. But, we're in Europe with crypto, we're in the UK with brokerage, and the goal would be to uh, round out both of those so you can see and use anything that that you have uh, that we have in the US if you're in a if you're a European customer. We're making progress there. We've announced Singapore as our as our hub in the Asian

market and we're going to use that to expand to to Asia. So, we're making progress and I think we'll cover a large portion of the population. Um, and you know, we're we're not stopping. We're going to we're going to expand further from there. So, the the goal is really to serve customers all over the world. when you think expansion globally like obviously in the finance world I don't know if I'm sure our listeners understand this but like there is just different rules everywhere you go and so you need different licenses you need different so many different things I don't even want to get through all the things you need so it's it's often very slow and difficult to move from country to country obviously the crypto world is very different right they're just natively you know global from the

beginning because it's all permissionless I'm curious as you think about this expansion globally and I know the world is not fully on chain and so like if you're going to expand you need to do it in the in the regulated way you need to do it with the licenses because that's how the world works today but like how important is blockchains in your ability to scale for example I know you've talked about tokenized stocks obviously crypto assets these are global assets like is your vision that everything goes on chain and then this thing can just be global easily uh obviously that's kind of what Robin Hood wallet is or could work as curious how you think of that dynamics as you guys kind of expand through the world Yeah, I think it's a great question. I think crypto technology and blockchain technology has huge advantages relative

to legacy technology. And there's really two ways of looking at crypto. One is as a tradable asset like options and futures and equities that our customers can can trade. Uh and the other one which I think is more interesting is as a fundamental technology change in and of itself where crypto technology is kind of next in line after if if you think about you know infrastructure of financial system starting with pen and paper filing cabinet to mainframe to on premise to cloud uh I think blockchain is the the next step in that where it's not just your your infrastructure and your server servers that are shared as

in cloud but a large portion of what would normally be be considered application code is also public and shared uh and and powered by the blockchain. So we can kind of see the power of this because we get to operate our tradey business at scale and also a crypto business and and we can see that the cost and the complexity the cost and complexity are both you know roughly 10x lower on the crypto side just because yeah because you know if you think about it what we're doing on both sides is exchanging dollars for assets. you know, their traditional assets on one side, crypto assets on the other. On the crypto world, transfer agent, clearing house, uh settlement layer, uh money

transmitter, all these things on the traditional side require entities and businesses that you have to interoperate with and exchange information and batch files with. On crypto, they're all done in software, which is which is very amazing. And it's not just a cost advantage. customers get a better experience because you have fractionalization and 247 markets by default and we've tried to introduce these with some success I I might add uh on the equity side where we introduced 24-hour market where we extended and this was very complex to do and that's why not so many have have followed us in doing it but you can now trade over a thousand single stocks 245 so 24 hours a

day five days a week on Robin Hood And that required so much work and most of our competitors can't even do it. Um, but this just happens for free in in blockchain. And you know going from 245 to 24/7 is very very hard because central clearing would have to operate on weekends which I I think is is not going to happen anytime soon. So we see big advantages to moving all technology to blockchain. And I think what I'm most interested in is getting securities on blockchains, not just public stocks, but but private companies as well. And I think the advantages of that are huge. I mean,

there's a lot of talk about US stable coin legislation coming in and US stable coins furthering US dollar dominance globally. I actually think uh US securities legislation which is right now going to be part of market structure uh which hopefully will come in the summer will further uh the dominance of US companies globally because uh a will make it easier for US entrepreneurs to raise capital on a primary or secondary basis will make it easier for people living overseas to invest in US companies at various stages which uh is going to be very very nice and good for those people because they're they're

investing in highquality companies and it'll be good for the companies themselves because they'll tap into a pool of global shareholders uh that are looking to to deploy capital. So that that's why I think crypto security uh legislation is so important and it also will get crypto out of this realm of you know people thinking about it as only Bitcoin and memecoins and and actually uh allowing us to offer real productive assets uh on blockchains.

Jay, I'll throw it over to you in a second. I just have one question on that. When you talk about the tokenized stocks in tokenized private equity, how far away do you think we are from getting that? Like I know the the the market structure bill is hopefully coming this summer. We'll see if it does uh and hopefully it's good enough that it enables this. But I'm just curious like even when that comes, I think a lot of people just think, okay, now stocks will go on there and anyone can buy it. It's probably not going to work that way. We're still going to need some sort of like KYC on chain. I'm not sure if you think that or not, but I'm just I'm curious there. And then if that's the case, is this a thing that's like end of year 2025? Is it still years away or

like when that market structure bill comes assuming it's good? How do you think about the timeline of getting stocks on chain and getting those traded 247? I mean I think there's some examples of this already working in prototype form call it. I think the real question is when is it going to be available in a form that people will actually want to use like the the mass market will will want to use. Um, and I think that requires regulatory changes, but also the product experience in every way to be superior to a traditional offering. And I I think that's going to be hard in the US because I mean, Robin Hood exists and we make it

pretty nice to buy stocks and fractional shares. So maybe the delta between that and an ideal offering is smaller. But if you think about overseas, um it's very difficult, right? And you can you can see that it'll probably mirror stablecoin where stable coin adoption in the US has not been super high, but overseas it's much bigger because overseas it's hard to get dollars. And you know, stablecoin and crypto technology basically merged to to form the best vehicle for folks that are in developing countries with rapidly depreciating currencies to get access to US dollars. It's basically supplanted the traveler's check uh in in that way.

I mean, people used to use traveler checks to to get access to dollars and and now why pay the fees when when you can just onboard onto a crypto exchange and and get stable coin. So, I think I think it'll be bigger internationally first, but but eventually, you know, the US will not tolerate people overseas getting nicer things. So hopefully uh we'll see that sooner rather than later. This might be a little bit of a a deep technical question. So I'm not sure if you've thought much about this, but when you think about building on crypto rails, there's obviously crypto is built in a way that there is a lot of open

source protocols, decentralized permissionless open source protocols that anybody can tap into, particularly on the on the back end. And and what crypto really needs is great front end. Like that is like really we don't have a lot of great go to market products yet. We have Coinbase which has done an incredible job. Huge shout out to them. Uh but we we still are in that in that phase of trying to find those great front-end products. And I wonder if have you thought about if you were to start to use crypto rails in the back end? I don't mean like selling crypto, right? I mean like using crypto rails to as you said have lower your costs and manage your efficiencies better and allow 247

trading. Do you see yourself integrating to existing decentralized protocols or do you see yourself building your own protocols? Have you thought much about that? Yeah, I mean we we deal with this a lot with the Robin Hood wallet which we've been investing more and more into. Uh, I mean the growth in the past couple of quarters on the wallet side has been has been really great to see and there's a bunch of challenges. I I wouldn't say it's only front end. A big part of the problem is you know you're having more and more of these layer twos and even layer 3es uh yeah getting getting started and you know you have the whole bridging issue. you have to move tokens

from one protocol to the other and I think that's kind of complicated and cumbersome to to manage. So I wouldn't call that a front end. I I think there's improvements needed at all layers of the stack. Uh and you know we we work with a lot of these companies. I think there's things that there's ways that we could help. We have Robin Hood connect which is uh on and off ramp. We partner with some of the biggest decentralized protocols and wallets. You know, we we integrated with Moonshot recently, but also MetaMask, Uniswap, some of the others. And uh I think where Robin Hood has an advantage is in the areas where crypto technology and traditional

technology merge. So at at the boundaries where actually I think the biggest pain points currently lie like how do I get my US dollars into the right crypto on the right chain as easily as possible. If I want to convert crypto into US dollars how can I do that seamlessly and and we've built a lot of the technology to do that for customers. Um and so I think the line between centralized permissionless and uh centralized and permissionless, custodial, non-custodial probably will uh get more blurry over time because I I think the user experience almost will will force it to be so. But yeah, I I

think Robin Hood can contribute. I mean, we're we've we've done a good job in the areas that we're uh active in right now, but there's there's more to do. You you mentioned tokenized stocks already, and you see that as a as a 10x like cheaper or or 10x better in terms of like profitability for your business, which obviously is a massive massive unlock. I know you guys are also doing things with stable coins. Uh I saw something about like using stable coins to settle on weekends, things like that. Mhm. I'm just curious if you can talk about more things that you've where you guys are using crypto or using blockchain rails where you're like, "Oh, this is actually making the operating cost of our business or you know the margins of our business like better." I'm curious if you can just talk about that of like

what things you're noticing or what things you guys are either using or like starting to use. Yeah. Yeah. I mean I I can probably share a little bit more about weekend settlement uh because I think that's a pretty illustrative example. So weekend settlement is a challenging problem because crypto runs 24/7 including Saturdays and Sundays and the traditional banking system is not open Saturdays and Sundays. So basically what happens is on the weekends we need to trade and settle with counterparties. So, let's say there's, you know, a huge swing in Dogecoin and customers have a net buy position of a billion dollars in

Dogecoin. Um, well, we need to exchange value. You know, we need to receive the crypto and send the dollars. So, how do we send the dollars? Unless the money that we have is in the same bank as our counterparty and it can be an internal ledger, we can't we can't do it. we can't transmit across banks because Fed wires closed on on weekends, right? So, we either have to have lines of credit uh which make everyone nervous because you have counterparty risk and and so they're expensive. People are reluctant to use them or we need to have all of this buffer at all of the same banks that we agree to our counterparties to use where we have to kind of anticipate

all right what how much how much dollars do we have to have? They have to anticipate how much crypto are are they going to have and we we have to we have to make sure that we have tons of buffer to handle all of the huge swings and as we know crypto has huge swings. So volumes go with price and prices can move a lot uh especially on weekends and so stable coin solved that problem for us because uh we can we can send value to our counterparties on weekends. And so we've been using more and more of uh of the balance sheet that would have otherwise been reserved for keeping crypto collateral in banks uh in stable coin form. And and I think I think

that's a great corporate use case. You're going to see that more and more uh with any company that needs to send money on weekends. uh as soon as it becomes more accepted, people don't worry about compliance and regulatory risk as much and they don't have to invent invest in bespoke legal work to clarify whether they they should be doing this or could be doing this. I think you'll see that being adopted ubiquitously by anyone that that has these types of problems, not just us. And on the retail side, right now, stable coins have a have a have a big flaw um big flaw that makes it very difficult for a retail user uh who's who's a little bit more sophisticated to

to hold uh money in stable coins. Um and I think this is not not just a flaw for retail, but also maybe even more so for institutional. It's that it's hard to get interest on on a stable coin. You know, Tether basically doesn't do it. I think Circle uh USDC in some cases does it custodially but not if you're self-custodying, right? And so not getting interest makes it impractical to to hold your money in stable coin form. So maybe you'll transact and send it back and forth in stable coin form, but if it's sitting there, you're probably going to want to put it at a bank where it can earn four plus percent. So that's why I think yield bearing stables is is

so important. That's why we partnered with some other great companies on USDG, the the global dollar network. The idea is to bring uh a yieldbearing stable coin to market and uh actually pass back the the majority of the yield generated to customers. I think that'll make it competitive to holding cash in a in a bank account. Very interesting. I I don't think people realize one on the first part of your conversation there how much bloat there is in the financial system. Uh, and so there's just so much you guys have to try to deal with and and I think, uh, ultimately blockchains just make it so much easier, which is awesome. Um, I just want to ask one more question on crypto and then I'll toss over to you, Jay. I don't know if you ever heard of the term DeFi mullet, but this is a term

that that we was thinking about saying the question like, do I comment on the hair? Do I not comment on the hair? So DeFi mullet, something we've been talking about for I don't know at least like five years now. And it was like the first thing when I when I learned about this idea of the DeFi mullet, and I'll explain to the listeners what it is if you don't know in a second. Um, I was like, "Okay, I see where this world is going." Most people probably aren't going to come on chain and like connect to these like crazy DeFi apps and take out loans, do this stuff, but we might use the existing applications like Robin Hood or your bank or whatever. And I think they'll probably link into these DeFi applications or stable coins like you just mentioned with the yield. um and they'll provide the benefits that

you get of onchain, but you still get the good UX of of you know, a Robin Hood kind of thing. So, one, curious if you've ever heard of the DeFi Mullet term, but two, um curious if that's a uh something you guys are thinking about in terms of like, I don't know, integrating into maybe DEX or integrating into, you know, borrowing and lending, you know, DeFi applications. Obviously, you're already thinking about that with stable coins to bring the yield through, but is that part of what you guys are thinking of like, hey, let's see what's going on in the open world of crypto and once you know something has been around for years and years and years and it's got that robustness to it, you know, we'll integrate because it gives better yields or better, you know, rates than what the traditional world does and we'll pass

that on to to our users. Is that kind of how you guys are thinking about it in in I guess the long term as well? It might surprise you, but I do like mullets. I'm a I'm a fan. I'm a big mullet supporter. Um, no, but in all seriousness, uh, so we've got the Robin Hood wallet, which is a DeFi product. It's entirely onchain, except for the on and off ramping where you're getting dollars in and out of DeFi, which obviously we want to make easy. So, Robin Hood Connect powers Robin Hood wallets uh, on and off ramping. But once you're on chain, you know, you're on chain and we have a a DAP directory where you can actually connect to various DAPs and uh do all of

that stuff that that you mentioned. Uh and then we have Robin Hood app which is a custodial offering except for the wallet functionality which serves as a bridge and you can buy bitcoin or other cryptos and send them uh to a crypto address or receive them. So I think that what you're going to see in the future is these are going to get closer together. There's going to be more integration. You'll have some DeFi capabilities making it making its way into custodial app where it makes sense.

Some some more custodial capabilities making their way into the wallet app uh as well where they make sense like like on and off ramping. I think the reason that they've been separate is lack of regulatory clarity really. So because there's no regulatory clarity um you have to keep these things separate because uh the wallet really uh is a piece of software. The financial you know custodial apps are more regulated. Um, and you know, once we get more clarity, I think the better user experience is to integrate some aspects of them. So, I think you're going to start to see more and more of that,

which I think in a way is the DeFi mullet that you're uh you're suggesting on the screen. Yeah, look at that. Tech in the front, DeFi in the back. That's what it is, by the way. Who is that? Is that uh is that that tennis player from uh from the 80s? Honestly, it looks like it could be you. If you just if you went for the full mullet, like you got the stash already. I think you should go for it. I got to work on the jawline a little bit. It's a good jawline. Yeah. Yeah. Jay, I think you're muted. Oh, sorry, guys. You're missing all the jokes I'm making over here.

Yeah, you got very excited. I could tell by your face. Yeah. Uh, want to ask one more crypto question and then we want to touch on AI. Do you think people care about self- custody? And I I should ask that differently. How how many people care about self- custody? Because in crypto, crypto people are obsessed with self-custody. It's the you know, it's why we're here. But yeah, when we look at the masses, a I'm I don't think I'm not sure the masses care about self- custody. And I'm also not sure they want self-custody because self- custody is scary AF. Like you lose your keys, you lose all your money right?

Yeah. What's your thought? I think self-custody there there's different layers and stages to it, right? Um they certainly care about being able to move their crypto whenever they want. I think, you know, we um we we didn't have the ability to send and receive crypto out of Robin Hood for a number of years since we launched. Uh we launched in 2018. We added uh crypto wallets which was really the ability to send and receive crypto transfers in 2021. So about three years later and yeah the it was a big pain point for customers in uh particularly when people became more

interested in crypto end of 2020 early 2021 to be able to move their crypto and I don't think they wanted to move it regularly. they're not, you know, always moving crypto in and out, but the idea that if they ever wanted to move it, they would be able to, I think, was was an important idea. And actually, it's not too dissimilar to uh traditional finance where um people might not want to move dollars from their savings account regularly. they might not want to transfer assets from one brokerage to another, but um if you told them they couldn't do that, uh they would be extremely reluctant to to use the

service. So, I think portability and being able to have control in certain moments is very very important, but I don't think the majority of customers are engaging in those types of asset movements on a regular basis. It's probably like a couple of times a year. You said uh a quote recently that really caught my attention around predictions markets. Predictions markets is another uh another area of the onchain world that has done very well with poly market doing very well during uh the the election season and I know you guys um launched a predictions market uh with Kelshi.

What you said I think you said let me read your quote. I think prediction markets are the future of not just trading but also information. Yeah. What's I have two questions here. One, I want to get your overall thoughts on predictions markets and why you said that quote, but also uh do you see a future where we're going to trade on Robin Hood, but also bet on on NCAA March Madness games or make predictions? No, I don't see that future. Okay. Okay. No, that's that's uh that's that's actually the present. Uh yeah, currently we have an NCAA prediction market. Uh yeah, so yeah, you can do that right now and unless you're in some states, but uh yeah, the lion share of the the country.

So where does that lead? I think prediction markets are I I think there's two things about them. I similar to crypto being an active trader asset but also an infrastructure layer. Um prediction markets are an active trader assets. Uh active traders really enjoy trading them and speculating and hedging. But there's also a societal benefit. Uh I I wrote a couple weeks ago when we launched the NCAA and also the interest rate the Fed rate prediction markets that prediction markets are truth machines. So what I mean by that is by creating a marketplace where

buyers and sellers can interact you get true price discovery. And in this case price discovery is a prediction for the odds of a certain event occurring. And obviously if the event actually happens the markets resolve very very quickly. So you get a pretty quick determination of uh what event actually happened in the past. So it's it's a form of the news. It's actually and you saw this during the election. A lot of people just want to watch the news to figure out who is going to win or who already won the election. And the networks were saying it's too close to call. We're not giving you the answer. Keep watching.

You know, they didn't call states until way way past the point that prediction markets had it at 95 plus% Trump. And so I think in this particular case, if you wanted to figure out who was winning the election, you have to look at the prediction markets. You find out, you know, in some cases a full day before the news uh the news would call it. And so you can see how they've supplanted the news in in this critical capability. So, I think we're going to have prediction markets for everything and it's actually going to, in my opinion, model the newspaper. And I think you're you're starting to see some of the prediction markets like Paul and and KI moving in this direction where you have the front page, you have your sports section art style leisure business

because I think it's it's closer to it's closer to the news in many ways than what you'd consider traditional uh betting. I want to flip over. You got anything else on prediction markets, Jay? No, you're going to flip to AI. Let's go to AI. Yeah, I want to flip over to AI. Um, and obviously you guys just launched uh a couple new kind of AI tools within Robin Hood. Um, but I before we get into those, I kind of just want to get your overall thesis or how you think about where this world is going with AI and you can pertain that specific to to finance. Um, but obviously AI is changing absolutely everything right now. And there's a lot in this world that's going to be impacted as a result of that. Prediction

markets are going to actually be probably more important because it's going to hard to to know the truth, right? Because there's so much out there. So, we can use prediction markets to help on that, which is great. Uh, obviously, we can use blockchains and that too. But just curious, you know, how you think where you think this world is going with it all first. uh and you can apply it back to Robin Hood or to finance. But um as I say that like where do you go with that question? Yeah, I mean I think uh I I think about all the things that I mentioned we believe in and are durable trends and I think they're robust to AI disruption. So uh more and more power to individuals rather than

institutions. I think that's consistent and robust to AI. In fact, AI is an accelerant to that because you have um individuals, individual software developers or creatives that in the past would have had a whole team of people uh to create a simple web app or you know an image or some some piece of marketing collateral or copy. Now these AI tools allow them to directly as individuals take what's in their mind and and turn it into a real product or real artifact.

So I think it'll accelerate uh yeah the the power and the capabilities of of individuals. You'll have more entrepreneurs more and more people will be able to start businesses as individuals more soloreneurs. I think more people will be allocating capital directly. Uh it'll probably become even more important to be an investor to know how to invest to pick the right trends because if individuals have all these capabilities you should see more and more companies um and you know that that requires some regulatory changes as well. uh loosening accreditation standards, making it easier for retail

to access private companies and easier for companies to go public, but even getting away from more companies, you'll see more projects, right? And um you know, allocating capital, making decisions about which projects are going to work, which are not, which is basically the mindset of an investor is going to become more important. So, I think these are all robust trends that Robin Hood is is in the center of AIdriven disruption, cryptocurrency adoption, people self-directing uh a larger portion, if not the majority of their finances and their lives, and AI accelerates these things that are very much in our favor. So, we can

benefit from it, but uh but I think we're also robust to to much of the disruption. Um but it's an opportunity for us. I mean if it becomes easier to write code uh then we have to adopt these tools ourselves. We have to make sure that we bring the technologies to to people and apply them to financial services in forms that people want to use. Um because maybe the activation energy to creating something as good as Robin Hood drops when engineering becomes simpler and regulations become relaxed and more and more things go on chain. So, um, we're very much in the

middle of it and benefiting from it. And I think the things that we believe in are robust to it, but that doesn't mean we're getting complacent. And, um, and we're we're trying to figure out just as much as everyone. What are the forms of AI that people want to use? Can we deliver them to customers safely and quickly? And uh, and can we create new things? Can we can we actually like u use this technology and push the frontier forward ourselves? Yeah, I love that. I had this question last week.

Someone asked me when I was on a podcast and I didn't have a good answer for it. And then when you were coming on, I was like, "Oh, you know what? You're probably going to be the perfect person to ask this." Which was, and actually, it's funny. You guys just launched kind of a a financial advisor service through Robin Hood that's done through AI, right? Um amazing tool. gives access to, you know, people who otherwise couldn't afford maybe a financial adviser or don't have access to it. So, I love that. I think it's super cool. The question that they asked me though is um as everyone starts to use AI to manage their finances and that's not just like here's recommendations, but they're start to do trades for you like there's like we already have like um algorithmic, you know, things, but now you have AI kind of doing it. And AI is

eventually going to be much smarter than humans. And so what happens to markets when we're all just using AI to trade and invest for us? Don't they all just end up doing the same thing? Like do markets just stop in that world? Like I don't know if you've thought that far. Like obviously we're not there yet. We're nowhere near there, but like when AI just get so smart, what happens to financial markets that I just cannot wrap my head around? Yeah. I mean, I think at the end of the day, financial markets, equity markets at least, um, I mean, crypto markets are a little bit different, but if we're talking about equity markets, they're they're long-term driven by, uh, earnings and profits. And in order for companies to do that, they have to create products

that people use and someone pays for. And so that that will remain. I think that as long as Yeah. As as long as there's like a consumer market where people pay for things, which which I think uh we're going to have for a very very long time, you're still going to have to create products that people will use and pay for. And I think if if an AI becomes really really good at determining what those are and allocating capital on your behalf, that's going to be very very good. Um, but I think at the end of the day, an individual is going to have to be making those decisions and and also benefiting

from them. Okay, final question before we wrap. Uh, why do you love chalkboards so much? I think the uh it's it's the feel of uh of having chalk in your hand. You know, some things can't be replicated digitally. Um, and that's why I actually think, you know, people will want to have human advisors still. I think that'll be a robust thing because, you know, no matter it could be 10 times as efficient for me to type something on on a computer, but sometimes I just feel better writing on a chalkboard and and brainstorming. This one behind me just has buzzwords. So that's that's not as active of a chalkboard, but

um I have another one here that I that I drew a map on. You you drew a map. A map of what? A map uh leading to the lost city of gold, which which in this case was San Francisco, right, Vlad, absolute pleasure to sit down with you today. Thank you so much for your time and for everything you're doing for democratizing finance. Shout out to you and the whole Robin Hood team. It's a pleasure to learn more about you and what you guys are up to and excited to see the future of Robin Hood. Thank you guys so much. It's been a pleasure. Wow, what an episode. Uh if you're still with us, high fives all around for being here and for supporting us. Truly appreciate you. Thank you so much. If you want to

meet me in person because you know I'd love to meet you guys, you can come to Toronto because I'm going to be at Consensus. It's going to be one of the crypto events of the year. It's happening May 14th to 16th. Great place to connect. Myself, Kyle, the Milk Road team, and so many more are going to be there. I'm going to be hosting some talks on stage live. I'm gonna be recording some shows on stage live. We're going to have an event. We're going to have some beers, hang out. So, register now. Hit the link in the show notes. You can get 350 bucks off your ticket if you register before May 14th.

Hit the link. You won't be upset. Would love to meet you guys there. Have a wicked awesome day. We'll see you back again tomorrow, folks. As always, if you liked today's episode, please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you while making you laugh. And if you're willing to step up your crypto investing game, we're going to also leave a link for Milk Road Pro. You get access to our portfolio where you can see exactly what we are buying. This is your number one resource to help you invest successfully in crypto. One final note, this show is for educational purposes only and

nothing we say is financial advice. Investing in crypto or any asset is risky and you should never invest more than you can afford to lose. Thanks so much for listening in my friends. Have a wicked awesome