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we really have an opportunity to not just be the dominant investment or trading platform but to be able to offer anything that you'd be able to get by walking into your local bank of America... become the dominant financial institution of this generation
We really cared about it. I think that, you know, inherently design with mobile apps, when you're kind of thinking through, particularly if it's like a new category, you have to think through how you can differentiate. The great thing about mobile, at least at the time was you had, you had little screen real estate. And so you had to make it simple. And I think so much of great design is figuring out, you know, the one thing you have to do, you know, one, one function, one screen, how do we make
our CTO basically has the mandate of making us first the best AI company in financial services. And then I joke with them, then we go expand beyond financial services. And I want to be the best AI company.
north of 75% of our customer support interactions were handled by AI, which I think is, I'm not aware of anyone higher in any industry.
we don't have an official API. We have some explorations in the past where we've opened up APIs to third parties. We have a crypto API actually, but, and then Robinhood chain is coming for our on-chain crypto activities where we launched a test net.
I think the advantage that makes it difficult to just build a Robinhood is that there's all this like regulatory infrastructure. You have to create a brokerage. You have to connect to all these legacy systems. There's like dozens of assets to support and account types, right? There's IRAs, Roths, HSAs. And so it's, it's not, it's like less vibe codable than, than most things. And people also have a pretty high standard for when they want to plug, you know, their, their agent into their money. Li
I think in finance, it'll lower the bar to being a quant trader. Now, I don't think everyone's going to want to be a quant trader. But I think the people, the relatively small group of people that want to do this are going to generate a lot of volume. So, you know, we have to contend with that and make sure that Robinhood is the best place for the quant trading, whether you're using our first party tools or whether you're using Claude Code or Codex or any of these other things.
So if you open up Robinhood right now, if you guys happen to use the app on every stock, AI will be telling you what's going on with the stock. So it's particularly useful if something's moving up and down and you want to understand why. We also have what we call Robinhood Cortex Assistant, where, and this started rolling out externally last week, you could actually like chat with it. So it's like a chat assistant within the app.
Yeah, I mean, absolutely. We've been fortunate to sort of like rise and really make a niche for ourselves with the last technology revolution, which was mobile, right? And now there's basically two big technology shifts that are probably going to completely transform financial services, crypto and AI, and we're working hard to be a leader in both.
I think for us, our press and our relations with the media were kind of overwhelmingly positive for at least the first three years. And then 2019 came around and, you know, we were at 7 billion valuation and then the press started turning negative. And we kind of, I think started panicking a little bit like, oh, is this the end of the company? Now the press is negative. Every time someone wrote something about us, we felt like we had to war room it and how to have a response. And, you know, uh,
Yeah. But yeah, still referrals through Robinhood are one of the leading ways customers get it.
I think what you're referring to is the Robinhood wait list, which basically had this referral mechanic where if you invite friends and they successfully joined the wait list, you move further ahead in line. So it was like prioritize based on number of people you invite. And I think that we look at the wait list, I think something like 20 to 30% of our growth came from referrals, maybe a little bit more.
I think one thing we did really early was we actually talked to customers. We tried to create like this user research motion where our office was right next to Stanford University. So we would have Stanford students coming to our office and trying our prototypes at the point where they were not even working at all. So, you know, it's like we were a little bit embarrassed to have these students coming in and using our stuff because it was just completely broken. And we'd have to tell them, well,
Well, right around the time you interviewed me at launch, this was I think December of 2014, was our first time when we rolled out Robinhood on the App Store. But it was gated, right? There was a wait list, so not everyone could use it when they downloaded the app. But we did a big launch anyway. And then a couple of months later, we removed the wait list. And I think one of our team the idea that we should just launch again. And we kind of looked at ourselves, we're like, but we just did this t
So that was like our second product launch and it was incredibly successful. I think our volume basically tripled in a span of a few weeks.
we just got rid of, of one of them. And by the way, the charge to the customer was 10 X bigger. Like if you, if you look at the commission brokers before they failed or got folded into bigger players, TD Ameritrade, for instance, they made on average $11 for every time a customer placed a trade, $10 of that was the commission they charged to the customer. $1 roughly was the payment for order flow rebate. So what we did was we just collapsed that and effectively took 90% of the margin off of, uh,
I think it does turn out that if you get customers to fund their Robinhood accounts, put actual money, um, into your platform, and then you give them all sorts of things to do with it. Um, you can make a really, really big business, even cutting out the trading commissions.
the assumption is that financial, financial companies, you know, exist to make money. We exist to make our customers happy.
Like now we have 11 lines of business generating a hundred million
Yeah. I mean, I think it starts with great people, people that you trust being in leadership positions where they have influence. We've gone through this as we've grown the company and the design team where, you know, the first go around, we hired some professional managers that, you know, were kind of further from the work. But I think the balance we've reached is the people that are the best at the work whose taste we trust the most are in leadership positions. And then, you know, they're kind
I think what was so differentiated about Robinhood at the time, Robinhood did two things well that, that hadn't been done before. One was introducing zero commissions and kind of proving that that could work. But the second was actually moving brokerage into mobile, which also hadn't been done. And I think we were, we, we made the right bets there because zero commission ended up being the industry standard and the, and brokerage moved to mobile as, as primary. And actually every brokerage of co
Yeah, that's a good question. I mean, this is all highly regulated and, uh, it's, it's become the industry standard business model, right? Um, so I'm not sure we're, we're excited to have a conversation about it. Um, I do think exchanges are here to stay. Market making is here to stay. Market making is a profitable enterprise. And so some level of revenue share between the market maker and, uh, and the broker makes sense. And, uh, it is regulated. Um, so I'm not quite sure what, if any changes n
It's the core of the business, right? Yeah. This wasn't, you know, a value judgment or some kind of, uh, moral stance and we weren't pressured into it by anything other than our regulatory deposit requirements.
Look, what I can say is, uh, we're going to do our best to, uh, make sure that we get better and, uh, serve our customers, uh, whenever, whenever they want to buy stocks and we'll do that. And we're going to get better and better every day.
Well, first of all, I'd be very, very empathetic. Um, I'd probably want to understand how someone could lose money, um, when they couldn't buy a stock at the all time high. So I think the details around that, I mean, if you look back, uh, and obviously this had nothing to do with the decision, right. But Thursday was the all time high.
I think that this could lead to some, um, really positive change industry-wide.
We probably could have handled it a little bit better. We probably could have offered more detail into that, uh, with the foresight that maybe customers would think that a hedge fund, uh, forced us to do it or something like that. Um, so certainly, um, certainly there's areas we can improve upon across the board.
I think I'm proud of, of, of how the firm navigated this. I think, uh, obviously there's ways to improve upon it. Um, I think that, you know, anytime you get a phone call in the middle of the night saying you have to put up $3 billion, um, all sorts of things run through your head, right?
We actually did do that. So we, we have been pausing new account approvals off and on, uh, depending on, on the load and, um, you know, customers have been experiencing in some cases, short delays, uh, with account approvals, obviously not an ideal solution from our standpoint, but you know, if, if we have to do that, we will do it and we have done it.
I, I feel like I've evolved as the chief executive and as a leader, I, I didn't used to be on social media telling our story very much, but, um, I'm out there trying to encourage more transparency.
I think, um, the great thing about, you know, these sorts of crises is, um, sort of months and, and years worth of work get compressed and people are just like super aligned on the key priorities we need to do to, to move the business forward. And we saw that.
moved to, uh, a much more sophisticated system where intraday we adjust the position limits on, uh, it was up to 50 stocks and we published that on our website. So that, that gave us a lot more granular control over it and is a better system. And we're going to only improve that and kind of take the learnings to other parts of the business.
I do think that there should be more transparency and I'm glad you, you brought up payment for order flow because it's something that I'm trying to take on. You guys might've noticed. I, I published a post on payment for order flow. I started a tweet storm that, um, is meant to just start the conversation around it. I want to understand kind of the misconceptions and the theories and, and knock them out one by one. And I think that'll lead to some positive discourse around it. And there certainl
I think the 3.4 billion in extra capital certainly helps. Um, I think I'm, I'm very proud of the transition that we made between Thursday and Friday.
this was a formulaic decision, um, made by Robinhood securities due to ... Citadel didn't call and ask. Sequoia didn't call and ask. Did the SEC call you and say this has to stop? No. But the clearing house did, right? Yeah. Well, they called and they said, here are the deposit requirements. And we worked with them to lower the risk so that
Most of our customers don't use leverage. Most of our customers aren't active traders or trading options. And if you look at some of the features that we've rolled out, the, the theme of this year has been, how do you turn a first time investor into a long-term investor? So fractional shares, recurring investments, drip, um, these tools allow someone to create a diversified portfolio of individual stocks and recurringly buy into them over time. ... I think a very small percentage of accounts, uh
for example, GME and some of these other meme stocks, we raised the requirement on those to a hundred percent. So those have to be fully paid for. Um, other stocks have an initial requirement, uh, as low as 25%. If it's one that, you know, is deemed by the operational staff and our processes is not being super volatile and it can, it can go in between. So 25% initial requirement all the way up to a hundred percent.
you have to be a Robinhood gold customer, which means you have to sign up and pay $5 a month. Most brokers don't gate margin behind a premium offering. So we're already a little bit more restrictive on that front. You have to have $2,000 in your account before you can borrow. And in December, we did lower our margin rates to 2.5%, which is very, a very competitive low rate. But let me tell you a use case for margin that I actually think is quite powerful. So, uh, obviously one use case is kind o
the goal is to build the finest legal and compliance team that the financial industry has seen.
the fine wasn't for gamifying Robinhood. It was for, um, payment for order flow and business model related, uh, related things.
margin wasn't involved in this particular situation. In fact, there was an escalation path. Uh, not a lot of people noticed until Thursday, but pretty much all the brokers, including Robinhood were, uh, ratcheting up the margin requirements for, for all of these securities, um, until they got to a hundred percent.
I really think if you, if you understand the underbelly of what T plus two settlement is, you immediately ask yourself, why aren't we settling trades in real time? And I wrote a post on that. I had a tweet storm.
our clearing firm is Robin hood securities. Um, but I think understanding the space a little bit better since Robin hood securities is, you know, a subsidiary of, of my company. Um, I realized these clearing firms had to do what, what they did.
We met all of our deposit requirements. The new capital that we raised, the 3.4 billion wasn't to meet our, our ongoing deposit requirements. We had met them and in order to relax them and eventually unrestrict them, we needed to raise some more capital and eventually have, uh, more cushion so that if we keep seeing the type of growth that we kept seeing, uh, we didn't have to impose position limits again.
we just had to do what we did to meet our deposit requirements. Because if we didn't do that, we would be in violation and the consequences of that could have been much, much worse than simply halting buying in the 13 stocks.
Robinhood's mission is to democratize finance for all. It's somewhat new. We've been around for a little bit over five years and we have, uh, a mobile app and a website that allows customers to, uh, invest in stocks, options, cryptocurrencies. We offer a debit card and a high yield savings product as well. Um, commission free and with no account minimums.
relentless focus on lowering margins offering very very high value to customers right and sort of we're well poised to do it
we really have an opportunity to not just be the dominant investment or trading platform but to be able to offer anything that you'd be able to get by walking into your local bank of America... become the dominant financial institution of this generation
the engagement with Robin Hood is less similar to a financial company where people maybe log on once every two weeks and more similar to sort of a social product where people are checking it you know five times a day
most financial companies basically every one that I can think of grow on the backs of paid advertising right and ours has been organic word-of-mouth
the growth rate of customers has been really rapid as well and it's been rapid in a way that no financial company has been able to achieve in the past five hundred thousand people sign up every month
Robin Hood gold has been spectacular um it sort of exceeded our expectations for how quickly we would grow our premium offering like I mentioned seventeen percent month-over-month
you can do a very similar thing with stock you can lend it out split the interest with a customer
revenue from premium services like Robin Hood gold can compensate for that
the cost of doing of trading is essentially zero
we were able to get 2 million users with barely any marketing
within a year of launch we had almost a million people sign up
the good thing about that approach is that you get the people that are most passionate about what you're building access first and they'll give you the best feedback they'll be the best beta testers and it's very valuable in the early stages
people love the platform we're very fortunate about that
you couldn't talk about anything publicly until you get that regulatory approval since we're FINRA regulated as a broker-dealer you're not allowed to engage in any sort of marketing or advertising and that really throws kind of the startup playbook out the window
we had to get regulatory approval to launch the product so in a long time it took a long time it was in a year it took about a year
we've had 50 billion transacted on the platform
you can go from downloading the product to buying a stock in three minutes
the way we make money is with the gold membership
we built our software from the ground up to be as automated and low friction as possible and not only leads to a much better user experience you get to trade right away after downloading the app but it also allows us to keep our cost structure down so we can offer this service out of a much better value than any of our competitors
gold has been doing tremendously well it's growing 17 percent month-over-month
our product allows people to buy and sell stocks in public companies commission-free so whereas other discount brokerages charge seven to ten dollars every single trade and have account minimums of $500 to $2,000 with Robin Hood we have no minimums and no trading commissions
the mission of the company is to open up access to the American financial system