Robinhood CEO Vlad Tenev on how this meme stock rally is different from 2021

It’s feeling like 2021 all over again. How will the return of “meme stocks” like GameStop alter the fintech landscape? Robinhood’s controversial cofounder and CEO Vlad Tenev explains what’s the same and what’s different this time around. Tenev also shares how his family’s struggles in 1990s Bulgaria shapes his view of the U.S. financial markets today, and whether trading on Robinhood is comparable to sports gambling. 



This is an abridged transcript of an interview from Rapid Response , hosted by the former editor-in-chief of Fast Company Bob Safian. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with today’s top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode.







A potential sequel to the GameStop saga



Back in 2021, there was a meme stocks frenzy. Companies like GameStop and AMC saw their shares skyrocket, retail investors piled in. In recent days, we saw a resurgence of meme stocks. GameStop at AMC flew up again, then down. Robinhood saw a burst of trading. When did you first realize that meme stock action was back? 



I think the first time that I noticed something was up was Sunday night. It was in the overnight session that Robinhood offers. So one of our recent products is called “24 hour market,” where we now allow over 900 stocks to be traded 24 hours a day, five days a week. Most places only allow you to trade during market hours, which is 9:30 a.m. to 4:00 p.m. It was after the kids had gone to bed. It was probably like 12:30 a.m. and I noticed that there was something going on. The first thing I check is: Are people upset at Robinhood? 



Do you stay up all night to make sure that everything stays okay? 



Yeah, I make sure my phone is next to me in the off chance that I do sleep, but I generally get amped up. I didn’t have to play the role of fireman and put out the fire. That’s kind of how it felt at some points in ‘21.



A new era for trading  



Some who work on the exchange are less excited about this “always-on” trading. Do you think it’ll lower volatility and risk? Will it make all of us worry all the time?



I don’t think there’s going to be any negative externalities. I mean, you can kind of see it in crypto markets that have been 24-hour by design. There’s a lot of work necessary to make traditional markets 24-hour. And we haven’t even gotten to weekends yet. Weekends are kind of the next frontier. 



But most of the action happens in data centers in New Jersey. If you look at the floor of the New York Stock Exchange nowadays, it’s basically a media enterprise. I mean, there’s a little bit of trading happening, but they’re doing tours. It’s basically a museum. So the days of people in the pits shouting and handing out paper tickets and the tallest people getting their trades completed before the average height people are long gone. Most of it’s happening in data centers. So it seems just archaic to me. It’s like, what if Amazon was open from nine to four? It’s all happening electronically, so there’s no reason for it.



Robinhood’s regulatory friction



Robinhood was predicated on the idea of opening up investing to more people. Your name alludes to helping those who aren’t powerful. But of course, the original Robinhood was also viewed by authorities as an outlaw. You recently received a Wells notice from the SEC that the company is being investigated—to do with cryptocurrency trading. Do you prefer to ask forgiveness than permission? 



Wow. I wasn’t sure where you were going to take that question. You know, Robin Hood himself grew up in the forest, assembled his team of Merry Men. And the forest kind of represented the absence of law and regulation. But of course, what happens when Robin Hood himself moves into the castle and becomes King? He has to conform to laws. I think that’s what’s so interesting about the legend.



It sort of reflects the journey of Robinhood as a company because to some degree, we started as an insurgent, but now our model has turned into the standard model. And we have become more institutional. So how could we find the ways to disrupt and turn that energy inward to ourselves? We’ve had to continue to evolve that. I think the secret sauce behind Robinhood and what makes us unique doesn’t have anything to do with our approach to regulation or anything like that. It starts with the customer. And when we design a product, the first question we ask is, “how can we make the economics 10x better than anything else that’s out there?” And then the second question we ask is, “Can we make it work?” And I think every other financial company that I’ve come across does those in the opposite order.



The legacy of Bulgaria’s recession



You grew up in D.C., but you’re an immigrant from Bulgaria. Your family left as communism was collapsing. How does that experience impact the way you look at financial markets?



I left in 1992. But in 1991, Bulgaria had an inflation rate of around 130%. We’re crying about 7% inflation in the U.S. It’s painful, but it’s not 130%. And in 1997, Bulgaria went through hyperinflation of around 1,000%, which was at the time the highest in the world. Zeros were added to the bills. Shopkeepers were under a lot of strain because they had to replace tags on all of their goods on pretty much a daily basis. My grandparents were using copper cookware to store value because they didn’t have access to functional markets that they could safeguard their wealth in.



There were a lot of learnings and most of all, you kind of appreciate the value you have in this country of a stable currency. That’s the reserve currency and kind of a liquid vibrant financial system that has been the envy of the world and has driven so much wealth creation. So it was very humbling in a sense, because I’ve kind of experienced what happens if it’s not that, and how much of our society takes these things for granted. 









Sports betting versus stock trading  



Robinhood makes it so easy for people to trade. Gambling on sports has gotten big. But they have programs to protect gambling addicts. Do you think about Robinhood’s role? 



When it comes to trading, one of the misconceptions is that we’re somehow promoting active trading products to passive investors. It’s not really how it works. The people that are in the active trading demographic want very, very specific things. And the folks that want retirement products tend to want different things. 



So you’re not worried that you’re encouraging bad habits?



We don’t provide financial advice. We want to make really good tools that people can use. And we have done a lot of things to minimize confusion. For example, in 2020, we were in the news a lot because customers were trading Hertz, which was a company that had gone bankrupt. Now, in hindsight, I think that ended up a reasonable trade—customers ended up making money there, but we want to avoid bandwagoning in the sense that someone’s just buying a company without having the information that it might have filed for bankruptcy. 



The way we’ve addressed things like that is to display contextual banners and up-to-date news feeds for customers. But I think the regulators have made it pretty clear that they don’t want brokers to put their hands on the scale and say, “I actually don’t think you should be buying this.” I think that if you really want to buy an individual stock, of course you should be able to. And the inability to do that, I think, is contrary to having a free market. I think part of what makes America America is the ability to make decisions with what you do with your money. 



Robinhood turns over a new leaf



I’ve talked to folks who work with you and they said, “Vlad’s really matured as a leader.” Do you know what they’re referring to?



I’m not sure. Whether it’s by maturing as a leader or just getting older and having kids, I realized that it’s less important to behave  in a way that others expect. Being authentic is very, very important. And I think a lot of times, and this is especially true in public markets, it could be scary out there. There’s so many things that can hurt your stock price. If you say the wrong thing, regulators can get upset. Some analyst might misinterpret it. You’re running these loops in your head of, “okay, before I say something, let’s run it through my 10 internal checks to make sure I’m saying what people expect of me.” You kind of get into being an actor, acting in the role of the CEO. I think figuring out how to get past that and being an authentic human that says what they want to say, was kind of a growth process for me. I’m still going through it. I don’t think that I’ve fully figured that out.



What’s at stake for Robinhood right now? 



If you look out 10 years, we want all of our customer’s financial assets to be custodied at Robinhood and all of their financial transactions to go through Robinhood. A lot of the money and assets out there are held by baby boomers getting past retirement age. There’s going to be a lot of bequests to Gen X and later to millennials. And we’re building the capability to be the best place for those assets to move to. If we actually execute on this path, we should be the premier default destination for what’s going to be the largest wealth transfer in history. And I think that’ll keep snowballing over the coming decades. We should be positioned well to benefit from that.