Would there be any limitation legally on Robin Hood

setting up a live stream of a giant roulette wheel and having people

make futures event contracts on whether it's red or black?

Yeah, I mean, currently our policy has been to,

have them be backed by real events.

So we don't want to do like derivative.

We haven't done any derivative prediction markets.

And there's there's different forms of that as well. Like

you have like prediction markets and then you have a prediction

market on how this prediction market is, is going to go.

So, so like for example, Poly Market had a market where it was the coin

toss at the Super Bowl and you could bet on heads or tails and was trading at 50%.

Yeah. For the toss.

And then it went to I mean, that seems very much like gambling, right.

Well, like,

why even bother having the Super Bowl at that point if people are willing

to, like, bet money on a coin toss?

Why not just have a continuous coin toss? Why?

Why just forget the Super Bowl.

Just have a coin tossing machine and let people trade on it.

Is there like, is there anything actually like stopping you from doing that?

I'm not sure.

Yeah.

I mean, I'd have to look into that.

We don't offer any of those contracts.

I personally, you know, I'm a former trader.

Probably wouldn't trade those.

Hello, and welcome to another episode of the Odd Lots Podcast.

I'm Joe Weisenthal and I'm Tracy Alloway.

Tracy, I think I've mentioned it before, but an idea that I've had

for podcasts in general, maybe this one Monday.

Other podcast I want to do everything in two parts.

So yes, yeah, interview the guest.

Because sometimes it's like all of the questions I want to ask

are only after I've talked to a guest for an hour

and have some better understanding of the situation.

So on an interview, the guest think about it for a few days.

Let the listeners, listen to it and have their questions,

and then it's like, okay, you know, we've thought about it for a few days.

Come back.

Also, our listeners want to know about this

and then have the second part of the conversation.

And just like a follow up, I want to like formula.

I won't do that, but I think it's a good idea.

It's also just a flywheel of content.

It's a flywheel, you know, it'll be never ending that way.

Yeah, I think that's a good job. Security.

And we did an episode last year that, was great,

but it also provoked a lot of questions, so I'll just jump right into it.

So we did an episode last year with a vlog of ten of the co-founder

and CEO of Robin Hood, and that was about the company's tokenization efforts.

So basically,

its ability to create instruments that would allow users to actually trade,

shares, not shares, I guess, but, you know, quasi equity or equity

linked instruments in private companies like,

you know, an OpenAI or something like that.

And then after that came out, a bunch of people, including the company,

there's a lot of reaction. Yeah, they're like, what the heck we did.

Since when did you know these private companies?

They're like, since when the heck did like,

we authorize our equity to be traded like this for all kinds of stuff.

I didn't even, like, really think about that aspect of the time.

So it's like I wanted to know more.

I think there's a lot to talk about here.

So I mean, it does feel like the I guess the trajectory of history

right now is marching towards tokenizing everything and just allowing

markets in everything and everything and everything

from like kind of quasi derivatives to one off event.

But like that just feels like the trend at the moment.

But at the same time, there are so many interesting questions

that this actually raises, not least of which is the safety aspect.

And yeah, how much of our lives

are just going to be watching lines going up or down and making bets on them?

Absolutely. Right.

You know, like with the prediction markets and you know, something

I've been thinking about with prediction markets is you can replicate equity

through that. Right.

Because you could just have like prediction markets on.

Will Tesla go up 1% today will go up 2%.

You can just Rico up or down. Yeah.

You can recreate all of these instruments and all these different formats.

So it definitely feels like a jump ball,

especially with a very sort of liberal regulatory environment.

Anyway, I'm very excited to say we're going to get a chance to do

the second half of that conversation that came out last July.

So we are rejoined once again by Vlad Tenev co-founder and CEO of Robinhood.

So Vlad thanks for coming back on a lot.

I'm happy to be here again.

And I think from the guests perspective, I'd also like this

if there was an opportunity to replace any of my answers from part one with,

Sorry, no, that I know the question to replace them.

That's the first one is going to live on forever,

but it's a very, interviewer friendly, format that you've created.

That's right. Of course we did.

Well, let's talk about that because, like we did that episode

where you talked about these tokenization efforts.

And I was I don't know why I didn't even think

like other companies whose private shares are being tokenized.

Are they cool with this? But apparently they weren't.

What's going on with that?

What happened with that?

Because it does seem weird

to be able to offer instruments of privately traded companies

when the company is themselves.

Like, just to be clear, this is not just not us.

Yeah. And, you know, they,

I think there

was various degrees of disavowal.

I think a lot of these companies are very concerned about their reputations,

and if they don't understand something, they don't have time to to dig into it.

They'll just say, we had nothing to do with this,

which I think is fair.

I think you talk to these AI companies and they all kind of say the same thing,

which is, yeah, we'd love our, our, company

to allow retail investors exposure.

Right. And we think that would be better for the world.

Everyone generally agrees with this.

But when you get down to the details of what that entails

and it is a new thing, not a lot of companies are doing it.

Nobody really wants to be the first, and no one wants to mess with the status quo.

And from their perspective, they want to focus on

running their business, increasing their revenues.

And this is sort of ancillary.

But for us, it is our business.

Our business is all about helping the retail investor, making sure

they have all of the advantages that institutions have.

And so,

it's very, very important.

So, we've we've continued on this journey.

Obviously the OpenAI and SpaceX

stock token giveaways in Europe were kind of step one.

But but it's evolved like we're continuing to pursue that overseas.

Okay.

But of course we want to find a US solution for US customers as well.

And actually this week we are taking public, Robinhood Ventures

fund one RV on the Nicey, which is a closed end fund.

So you can think of it as a venture capital firm that we're taking public.

We raise capital from retail investors and some institutional as well.

And we use that capital to invest in private companies,

which we've already invested in, and quite a few.

These are things that traditionally would be limited to accredited investors.

Right.

But it's non-accredited vehicle and also no carry.

So so actually one of the things we've been hearing

is from a perspective of an LP that invests in venture capital firms

and has to give up that performance fee to the manager.

This this is this is a disruptive vehicle.

And for all of the Robinhood Ventures. Yeah.

Portfolio companies and these are companies like Databricks or, Revolut.

I think I have to go through all of them

because I don't want to pick out a particular, boom, hypersonic.

Oh, yeah. We had their see on. Yeah. Macau,

and stripe, which we've signed in and not closed.

And I'm probably forgetting some, but,

yeah, these are all companies that are excited to have Robinhood

and retail be a part of the picture, and they film

the videos explaining why they chose to be to be part of this.

So there are people that want to be the first.

And of course, this is a different product than tokenization of an individual name.

And so it's like a little bit more palatable to most of these companies.

But I think it ends up in the same place.

I think there's going to be a gradual acclimatization

to retail access to these companies.

And, you know, Robinhood

is going to be leading the way across all aspects of this journey.

But, you know, our approach to it has has evolved a little bit.

You know, now we're at the point where we're actually surprised

how many companies are interested in it

and are engaging and view it as a differentiator.

So I think at least for a bit, we're we're going to

we're going to be less, less aggressive,

than we've been in the past and just get into these companies

and make sure they want to

they want to be part of what we're doing willingly and openly.

I definitely have a lot of questions on the venture fund in particular.

And you promise to, to answer all of our geekiest questions about, like,

the technical structure of how it works.

But before we go any further, I have one conceptual question,

which is when you think about the difference between, I guess, investor

trading and gambling, how would you differentiate those three activities?

Because I think a lot of the tension that arises from

something like tokenized stocks is this idea that like,

well, you know, when you buy a stock, you're buying equity.

The clues in the name, right?

You're buying equity in the company that's supposed to come with certain rights.

It's supposed to lead to a virtuous circle of, you know, the investors

putting capital in the company and the company talking back to its investors.

And so I think if we just step back for a second

and talk about how you see the differences

between those three activities, that would be really helpful.

Yeah.

I think that the difference between investing

and trading is really one of velocity.

I think the mindset of, someone and by the way, it's not always different people.

It could also be different activities within one person.

So in fact, we have a lot of customers

who have multiple accounts that they have for different purposes.

So investing to me is the mental model

is buying something and I never intend to sell it.

Longer term.

So, so it's sort of like

accumulating assets and you intend to, to have them only grow.

And of course, maybe you'll sell it if you actually need the money.

But the intent is always, holding on to this and I'm building like,

monotonically increasing portfolio,

trading

is I'm going to move in and out because I see an opportunity.

And that opportunity might not exist in one day or three months.

But there's like a very particular thesis that I have that's time

bound and systematic and, I think gambling

is, I think gambling is like,

mostly emotional, driven, like, maybe I really like this team.

Right. And they're my, my local team.

So I'll just, you know, put put some

for entertainment purpose behind it.

Tokenization specifically.

Just to go back to this question, you mentioned that you're

through the regulatory environment or you're able to move a little bit

more aggressively in Europe than us.

But like I said, Europe or U.S, if someone buys something

that on the Robinhood platform is called an OpenAI token.

Yeah. What are they getting?

Is it is there do you have equity that has been like backing it?

Is it a sort of swap where the only thing backing

it is your promise to like redeem the token at some price?

Like what does the what what is the token.

Yeah.

So, all of the tokens that we have offered in Europe,

including the SpaceX and OpenAI, giveaways.

So those haven't been unlocked for training.

It's basically just we gave our customers a gift

that they, they hold in their accounts.

And that's because or actually private markets, even in Europe

for tokenization, we're sort of like working through

since we're the first to do this, at least that I'm aware of.

We're working with the regulators. Okay.

Make sure that when we unlock those for trading, the product is safe. And,

is sort of

like meets all the answers, all the questions and meets

all of the requirements for making sure customers are clear on how it works.

So, the intent is for that to happen later this year.

So we're working on it.

But as of now, private stock tokens aren't tradable.

They're just they're just gifts.

And all stock tokens are backed by,

underlying equity or like,

equity equivalent position in,

for example, OpenAI doesn't have traditional equity because okay.

But there is.

So just to be clear, someone acquired some equity

at some point in a, in a VC round or whatever it is.

And when someone buys an OpenAI token that exist

that that link exists to an actual asset and someone has with the caveat that

nobody's buying the OpenAI token through Robinhood, currently it's just been given.

Okay.

So the holds those tokens are they they've been gifted, but those are

the token holder doesn't have the equity.

It's in the like special purpose vehicle I assume.

So yeah. Technically the way this works is

it's kind of similar to a stablecoin.

Yeah.

So you have your bag of traditional assets that are governed

by traditional rules and legal covenants and whatnot here.

And then you mint and burn tokens against that.

But yeah, as of now in Europe,

it's a derivative, derivative product.

And that's also subject to change.

You can think of this as kind of the paperwork around the technology.

The technology is the same.

But what we have been hearing from customers that,

hey, they're a little bit concerned, you know, with traditional stocks

in the event of bankruptcy of of Robinhood or something.

It's it's very clear what happens. Yeah.

And so in V1, I think a lot of those questions were ambiguous.

But since then we've continued working and we're going to have

a V2 and eventually a phase three of this offering where, we,

we believe we'll have a path to actually addressing all those concerns.

So now you're in you're at the point where if you buy something that's tokenized,

maybe it's a little clunky and it is slightly worse,

as a product than if

you have the traditional, equity. Right?

If you have access to that, some people don't have access to it.

So it's actually much better for them.

But I think you're going to get to the point within the next year

where it's it's superior in all practical ways.

And I think that's where things really start to get interesting.

And just on the ventures fund, I know you said it was a closed end fund,

but is that like a 48 thing or it's a 4040?

Okay. Yeah.

The other thing I'm thinking when I hear all of this is, you know, I,

I find financial engineering interesting and it certainly gives us

a lot to talk about.

But on the other hand, it seems like so much work.

Would it not just be simpler to try to lobby

for the accredited investor rules to actually be changed?

Like, how are you making the decisions to we're going to create all these

new products, which I assume are a lot of work for you guys.

Take a lot of discussion with the regulators

versus just lobbying for these old rules to actually get overhauled.

Yeah, I think we're doing that as well.

I think the accredited investor rule,

needs to go.

Frankly, it doesn't make any sense.

But I don't think that answers

all of the problems that people have with private market investing.

The other problem is just liquidity.

Like, I don't I don't even myself. Right.

Who has access to these things?

I don't want to have my my capital locked up for ten years

or possibly more, for, for these companies to go public.

And some of them might never go public. Right.

So there's liquidity.

There's also just access.

And I mean,

Robinhood, part of what we're doing here is we're out there hustling,

getting into these deals.

Because I'm in Silicon Valley, our team is there.

Unlike most of these financial companies that are here in New York.

So we happen to kind of be in the epicenter of where,

yeah, deals are getting done and where the companies are based.

The know carry, obviously, and the accreditation, you know,

if we could solve that through other ways, that will become interesting. But,

you know,

Chairman Adkins of the SEC actually specifically called out closed

that funds as the preferred vehicle for having access to private.

So, you know, we're

we're we're doing our part working with the regulators to try to open this up.

I think they agree that it's,

it's a problem.

And, you know, I don't think that it's going to be the end state necessarily.

I think this thing will evolve.

But, we want to serve customers and work with regulators

at all stages of it. So,

and, you know, you do this once,

the fact that it's hard is also kind of attractive

because it makes it so that or unique, like we figure it out.

We, we have,

qualities that we can bring to bear that not all of our competitors can.

For example, you really need to have, both sides.

You need retail to actually be on the platform

and to be serving customers who are interested in these products.

You also need to get the supply.

And I think Robinhood is somewhat unique in being able to actually do

both of these things simultaneously.

And we figure it out once and then we turn the crank.

So, you know, you notice we named the RV Robinhood Fund one.

We do anticipate there will be other funds.

We already have lots of ideas of, of of unique products we can offer.

So it's really just the first step.

So you mentioned being in Silicon Valley and being able to source these deals.

And this is the other thing I wanted to ask you because getting into a private

a hot private tech company at the moment seems incredibly competitive.

And Joe and I, we go out and we talked to a lot of venture capital funds,

and they always give us the same pitch, which is, well, we're different.

We build long term relationships with our investments.

How is Robinhood actually competing in that space?

And what I guess differentiates you from the sort of classic these you.

Yeah, I mean, a big one is we can say that there's no carry on these funds.

And what that means is it's just the more more,

we believe a more investor friendly vehicle.

Right.

Typical venture capital firm will charge the management fee.

There's also a carry on top, which means every dollar passed a hurdle rate.

20% of that goes goes back to the fund manager.

So it's more investor friendly product.

The other thing is,

I think a lot of these costs, a lot of these companies are interested

in retail and no other venture capital firm,

can say, hey, actually, RFPs de facto

not technically LPs, but the people investing in your company

and who will get the underlying exposure through this fund are normal people.

Mom, mom and pop.

And I think that's something that nobody else is offering.

So that's a unique differentiator.

And some people don't like that, to be fair.

But other people really, really like it.

And for those people, and I think in the future,

less people will not like it because of the uncertainty.

And that'll just make it more attractive.

So the the headwinds are receding headwinds. Right.

It's never going to be

as difficult as it is right now to get companies interested in it.

And I think it'll actually get substantially easier.

We kind of went through this with IPO access, actually.

So we have the largest retail platform for access to IPOs,

where we function as a selling selling group member.

And, you know, we first rolled this out slightly before our IPO.

The intent was Robinhood's IPO would be a big retail offering.

And I think at the time it was the largest for its size.

It was north of 20% retail allocation.

The other companies that

that that allowed us access

to their IPOs that year, I mean, they were early adopters.

They they saw the vision.

We also just had to like, scratch

and claw and bang on a lot of doors and ask a lot of favors.

Right. There was some skepticism.

Then the IPO market shut in 2022.

And then we when we reopened, an interesting thing happen.

Now. Everyone's coming to us and asking us about retail strategy.

Pretty much all of the IPO names are coming to us to talk about retail.

And and so we saw that shift in just a few years.

I think this will be even faster for privates.

I want to ask.

So okay, you mentioned the advantages is okay, there's no Carrie.

There's things like that. That all sounds nice.

I foresee a potential conflict of interest

that I'd like, you to talk to me about.

In a traditional VC fund.

It's pretty obvious. Like the goal is to make a lot of money, right?

You make investments and you want them to go up.

It strikes me, and especially when hearing the names of the companies

in RVI, it's like they're very sexy names, right?

They're the kind of household names to the extent that that exist

within private companies and boom and data bricks, etc..

It seems to me like, okay, the traditional VC fund,

like you're going to optimize for making the most money,

the best returns, including names that no one has ever heard of.

Why should I not think

that Robin Hood's portfolio has been optimized for retail awareness?

Not for the best returns, but for the collection of companies

that will

that will spark the most triggers in people's heads to get them invest

because they've heard of them and they're sexy and not necessarily

the best options out there in terms of investing.

Well, I mean, first of all, we are incented to make this firm,

perform well, right?

We, everyone will see it.

It's going to be highly public.

The returns will just be out there.

And, you know, we have a fiduciary obligation.

We've got a great fund manager that we've hired,

and we're underwriting all of these deals extremely rigorously.

I think the biggest worry that you have with things

like this is actually adverse selection, right?

Is are you just going to get into the deals of the companies that,

need the money and are desperate for.

Right, right.

This is what you run into with like new things typically it's like, yeah,

when am I going to start looking this like,

what I think because I've got

like I mentioned this on another episode, someone that was like, Joe,

someone is selling some anthropic shares that this interest you.

I'm not investing in companies I cover in private markets.

I'm not gonna do it.

But like,

I always have the thought, like, you know, if someone's offering to sell it to me,

they must really want it.

When they're asking us.

They're asking when they're, like, offering the equity to Joe.

Like, that's like a bad sign.

I know that's a bad sign,

but that adverse selection of, like, by the time it's getting allocated

to retail, like a bunch of people have decided to part with it.

We have to we have to flip that on its head.

And actually all of the deals that we've gotten into

have been competitive deals, like we've had to work for these allocations.

You know, I've had I have a lot of friends that are venture capitalists.

Yeah. And I think,

some of them,

like I've been talking about this for a while,

this general idea of we want to get in and actually start

competing with you guys, you know, and they never took me seriously.

But then we started, you know, getting allocations and deals

that they wanted allocations in.

And I've started getting calls and they've been telling me, hey, this

Robinhood Ventures real thing, I have to contend with you now. So,

I think we're we're very proud of the companies that we've gotten thus far.

I think you made the point that one of the drawbacks

is liquidity, which is always going to be a phenomenon in private markets.

Another drawback to this is that you don't the investor doesn't know anything.

There's no ten cuz there's no earnings calls or anything like that.

And okay, you own some tiny slice of a private company,

whether via a token or whether via RV.

You don't really know what the share count is.

You don't know, like

how much have they like allocated to employees this quarter

because they're under no obligation to think.

Then are we heading towards a world, do you think, in which the trade off

is like, okay, investors can get access to almost everything via some instrument,

but are we heading to a world where the flip side is

and they're going to know a lot less about the companies that they've invested in?

I don't think so. I don't worry about that.

And in fact, one of the innovations that we've we're putting out there

with the launch of this offering is private company detail pages.

So you'll actually be able to search for the private companies

themselves in Robinhood and see all of the information

that's got like their like revenues, like earnings, like all the traditional

like they're not it's publicly available information, what they've chosen to share.

But it's all in one place.

And you know, you get you get a lot of useful stuff in there.

You see the valuation history. All right.

So you can see like, you know, the chart of companies like Databricks, for example.

Yeah.

And I think there's just a lot of information out there.

I mean, if you think about, investing in a private company today

versus a retail investor investing in a public company,

say, in the 80s, I'd venture to say there's more information

you have, like App Store analytics data for consumer products.

There are out there a lot of these late stage privates

are doing public company like disclosures and audits on a regular basis,

because this isn't you know, these aren't $100 million companies.

These are yeah, some of them are in the hundreds of billions

of valuations, tens of billions probably 15 years ago.

These would have gone public a while ago.

So, I mean, we've generally started with household names, with some exceptions

that are already established at the frontiers of the industries.

And these are

like the companies that would be closest to being public.

So if you think about, you know, public company IPO access

candidate Robinhood Ventures, Robinhood Ventures is filling.

It's like gradually extending backward.

Actually, the thing I'm most excited about,

if I, if I had to, point to something, it's

eventually getting to the earliest possible stages.

Like I think retail should be funding seed rounds like the first capital

in a company should have, retail participation.

And I think we hear from the customers.

One of the concerns is, well, these

these companies are fairly late stage.

How do I get exposure to something that's earlier

so I can get in on the ground floor?

And I think that's something we're excited to dig into and, and work on.

Would that be like a Go Fund Me competitor or something?

Because there are some good Kickstarter.

Kickstarter. That's what I want to do, not go fund me.

Well, the difference is with those products

you don't actually get any ownership you're giving.

You're making it.

Sometimes you get early products, I guess, but that's about it.

Yeah, but what they want is, is ownership.

They want to invest in something when it's at a valuation of say, 10 million.

Yeah.

And if it gets to 10 billion, that's

and then they'll learn that 99% of those companies go to zero.

But they have to learn that lesson for themselves.

It sounds like, well, you know, that's where we come in, right?

And we think that we can,

like,

we can figure out what what the right deals are.

And what we intend to do is offer, great companies to customers.

Well, on this note and just going back to the ventures fund as well.

I mean, one other issue I foresee is that,

you know, you see a lot of flow and information in the market, and

you can imagine some of your competitors potentially thinking that, you know,

maybe some of that flow would inform how the fund is actually managed.

I mean, in some respects, like you're starting

to get a little bit investment bank where you have this huge flow business

that you can glean market insights from, and then you also have managed funds.

How are you sort of hiving off those two activities,

or how are you thinking about how, like the data and the flow data

that you see, how will that actually inform management?

Yeah, I mean, certainly one of the advantages is we get,

we can we know what retail investors are interested in.

Yeah.

And by and large, what we try to do is give people things they're interested in.

You know,

if they're not interested in it, it's not going to be a successful product.

So I think that's a big differentiator as as we think about this product,

in terms of how the fund is managed, it has a separate board,

with with great board members, separate, you know, everything auditing, compliance.

So it's like, a company within Robinhood, the management company.

Yeah.

So there's a Chinese wall, effectively.

Well, you know it.

I don't know, get into legal questions, but,

I don't even know if that word is appropriate.

I was going to say I don't think we're supposed to use that anymore, so.

I'm sorry, but, Yeah, of course you can imagine everything that we do

is highly regulated and scrutinized by armies of professionals.

So, Yeah, that's that's the one thing we were so established

at this point that we we have to play everything by the books.

You have a relationship with Kelce so people can actually access,

Kelsey's markets through the Robinhood platform.

When trying to understand who is going to make money and prediction market

which is more valuable, the liquidity pool

and activity that emerged on Kelce

or the distribution that you have through Robinhood.

And like you know, how which which

which is which is the hardest thing to replicate here.

Yeah.

I mean, it's it's fundamentally two different businesses.

Right.

You can think of Kelce in this case,

playing a role similar to an exchange in the equities and options market.

Yeah. So

it's like institutional business.

Predominantly although in CFTC land, it's interesting

that the exchanges also have the ability to go direct to consumer,

which you don't see right in, in traditional equities.

And, you know, it's it's a business where you're matching orders.

So you're working with market makers, you're working with professional traders,

you have retail as well.

And to win there you have to have great technology, low latency.

You have to be good about listing products,

maintaining market integrity.

And, you know, it's

it's like, complex business.

Right.

And that's why the businesses that have gotten scale and traditional

assets are worth, you know, tens of billions of dollars, sometimes more.

We have a slightly different business model.

The way to think about Robinhood is we're a financial super app.

We should be the best place to keep your your money and your assets

and or building products to make sure more and more of your financial life.

Ideally, all of it is on Robinhood.

So if you want to trade prediction

markets, options, futures, you're an active trader.

We should get 100% of your active trading activity and we compete for that.

We also want your retirement account, your kids custodial accounts, your trusts,

all of your mutual funds.

Eventually, your spending activity through our card

products, you're banking through checking and savings.

So it's really about how do we own, the entire financial relationship.

Yeah.

And we vertically integrate

where it makes sense, where we think we have a unique advantage.

But, it's not like, a focused, you know, exchange business, although, you know,

I should say we entered into an agreement, we've acquired,

a stake in,

Roth era, which is formerly ledger X, which is a DCM.

So we do intend to,

actually vertically integrate the prediction market side of the business.

So one of the things we often hear in defense of prediction markets

is this idea that, like, well, actually, if you're an institution investor,

this could be a way to hedge some exposure that you have.

So I don't know if you're an airline and a huge part of your expense

account is oil.

Maybe you would take a position on what's happening in Iran or something like that.

Yeah, I know that for if you're a retail investor, well,

this was going to be my next question.

I know that you see mostly how retail investors are behaving,

but do you see any evidence that people are like thinking through it

that systemically versus just like placing a bet on

whatever particular contract kind of catches their eye?

Yeah, I mean, I think there's lots of stories out there

that have been covered about people being incredibly scientific about, all of their

trading and prediction markets gives you a wide surface area to do that under.

I mean, you have obviously the sports contracts,

which everyone likes to talk about, but economics, you've got a contract

on alien disclosure, which I really that's one of my favorite ones.

Last I checked, 22% chance that there will be alien

disclosure by the US government this year.

And rising, I think rising recently after all.

Well, there's been some, some, some chatter about that for sure.

But yeah,

I mean, I think that like, there's people out there

that are studying these things in detail, they're building models.

And what you find is with any nascent market, before you get like full

institutional participation, there's more opportunities.

And I think now we're before the point where

these opportunities are arbitrage by by the big players.

I asked this question recently.

The CFTC chairman, Michael Seelig, and

I think we kind of got a no answer, if I'm being honest.

So maybe I'll try it with you as you understand it today,

would there be any limitation legally on Robinhood

setting up a live stream of a giant roulette wheel and having people

make futures event contracts on whether it's red or black?

Yeah.

I mean, currently our policy has been to,

have them be backed by real events.

So we don't want to do like derivative.

We haven't done any derivative prediction markets.

And there's there's different forms of that as well. Like

you have like prediction markets and then you have a prediction

market on how this prediction market is, is going to go.

So, so like for example, Poly Market

had a market where it was the coin toss at the Super Bowl.

You could bet on heads or tails.

And it was trading at 50%.

Yeah. For the toss.

And then it went to I mean that seems very much like gambling. Right.

Well like why even bother having the Super Bowl at that point

if people are willing to like, bet money on a coin toss,

why not just have a continuous coin toss? Why?

Why just forget the Super Bowl.

Just have a coin tossing machine and let people trade on it.

Is there like, is there anything actually like stopping you from doing that?

I'm not sure.

Yeah.

I mean, I'd have to look into that.

We don't offer any of those contracts.

I personally, you know, I'm a former trader.

Probably wouldn't trade those.

I think the purposes for, people

trading them is, is probably more entertainment.

But, yeah, that's not to say that all prediction markets are like that.

And, and I'm not against people innovating because that's how we discover things.

Right. Like we can be like, yeah, yeah.

Generally speaking,

I'm in favor of people trying new things and seeing what happens.

As long as nobody is getting hurt and, you know, market integrity and,

and investor protection, all of that is being upheld.

Just on the relationship with Kelsey.

Like if you want

if someone is going to be you want to be the one stop shop for all money.

Presumably they're you know, Poly Market is going to build out its US version.

I don't know exactly what's data that my other competitor is,

is not going to be an exclusive thing or will you will is the goal.

So that a user of Robinhood can trade predictions on any platform.

Yeah.

So even currently our our relationship

we connect to multiple prediction market back end exchanges.

Koski obviously is is the larger

because they have the the vibrant sports contracts.

And they've been moving fast.

We also have forecast X which is the prediction markets,

subsidiary of Interactive Brokers.

And as I mentioned before, we've got

we've got Roth era, which is, which is ours.

And also we're continuing to talk to these guys.

Everyone's interested in, you know, having access

to Robinhood customers, sending our orders there.

I think the way this plays out is similar to our other asset classes,

where we prioritize for where the customer is going to get

the best execution and also contract variety.

And, we'll send our orders there.

And I think where this ends up is you'll have lots and lots of destinations.

You'll have smart order routing.

And the contracts, I think will be increasingly fungible.

So at some point there's going to be a way to,

cross books and actually offload risk.

And, you know, you'll have the,

election contract here or an election contract there.

And, and, there will be a layer where you can actually, like, even though

there's technically on different exchanges, exchange one for the other.

I would say more about this because this was actually going to be my next question.

But when when you think about what makes a good prediction market,

the complaint that we often hear is, well, there's just not enough size,

there's not enough liquidity in the contract.

So I imagine a big component of who you're partnering with is just like

the largest platform that's out there, like a Kelsey.

But can you describe like actually what you think

makes a good prediction market for investors?

Like what are the pros and cons of each one?

Yeah, I mean I think volume and liquidity and contract

selection are are the big things contracts selection.

Customers want selection.

They want variety.

They want to be able to explore.

And both traders value this because they can trade more things,

but also the casual use case of just looking at the markets

and figuring out what the odds of, of events are.

Liquidity obviously improves things.

It improves the prices and also improves, the odds of getting filled.

If you bring in an order with size,

and, yeah, I mean, I think those are basically the,

the main things I mentioned at the beginning costs, transaction costs.

Yeah.

It's very easy with prediction markets

to replicate things that we don't think of as event contracts.

So you can like recreate a line that looks like equity or futures

on a prediction market.

You could, you know, you could have.

And I'm curious like and I think some of those products are very useful.

Yeah. Which that's exactly what guys do you see.

You're a point where particularly from the perspective of a trader,

where essentially the exchange itself

can be disrupted or sort of Napster ized or something like that,

because they have the instruments to get the price exposure that they want

without having to interact with the traditional equity, equity layer.

I think it's different.

You know, I think that, there's obviously equity exposure

is extremely low cost right now.

Yeah.

In large part due to our efforts in the space.

But if you want to buy an equity,

I mean, it's just never been cheaper, right?

Right.

Are or are all in monetization on equities.

Business is like two basis points.

So I don't really think it's competitive with that product.

The other thing is you have leverage, which again

Robinhood for our active traders, great margin rates.

I mean, the, the I think the most competitive

margin rates in the industry at least that I'm aware of,

we provide leverage to prediction market traders right now.

Leverage is not permissible in prediction markets.

But that's something a lot of people are talking about.

And so something you're worried about.

Well, it's, I guess we're

working on it to some degree, which is just driving towards clarity.

But since that would have to be an exchange product,

the exchanges would actually have to have to get clarity.

But I think it's coming.

Look, I mean, I don't think, you can imagine

the market is still in its infancy, so

you'll get all of these things introduced.

And when you look at the options markets for traders, the leverage is actually

a very attractive element of it being able to,

you know, put put in a relatively small amount of money and get large exposure.

Yeah.

So I think there's a lot that prediction markets,

there's a lot there's a lot of growth and a lot of evolution

that's needed before it becomes like a full institutional grade asset.

But it's underway and we should assume that it's it's going to happen

and it's going to happen quickly.

And I think there's all sorts of

we view this and we have early insight because we're actually, I think

the only one of the only places where you can have all these assets in one place.

We don't see any cannibalization.

We traders love it.

And I think we see an opportunity in combining,

all of these assets into one cohesive picture.

For example, you can imagine you have a particular equity

in that equity detail page.

Say it's a Tesla or another company.

You see prediction markets related to that company.

And then that gives you a comprehensive view.

And you can trade very specific things.

We think there's a big opportunity in earnings as well.

A lot of people have thoughts on how companies are going to do with earnings.

They have models.

Stock price is an imperfect proxy for that.

So you know, the EPS and revenue

contract directly would be would be very attractive.

And right now that's in a little bit of a limbo because it meets the,

it meets the the criteria of a securities based swap,

which would be an SEC product. Right.

So, harmonization is needed to, to clear the path for listing products

like that, which we're working with the,

the regulators and collaborating to try to figure out. But,

yeah, it's it's it's exciting from like a market standpoint

because we're in the early innings and, and you can kind of see the future

of how it's going to evolve.

It's going to be a much bigger asset class, much more institutional.

It's it's never yeah.

And it's evolved similar.

I think it will evolve similarly, but more quickly

to other asset classes that have come in in the past.

Just going back to tokenized stocks for a second.

Does, does consent matter at all?

That sounded more like Epstein intended it to sound like,

but like if an OpenAI comes out and says, like,

we have some reservations about this, we have some concerns.

Would that give you pause for providing a token in that particular company?

And then also I'm thinking about, you know, your role in the market

is expanding as you start these new venture funds and things like that.

You might not want to annoy a bunch of private companies at this stage.

So how are you balancing those considerations?

Yeah, these are all considerations that we're thinking through.

Obviously right now, the policy that we have is

we'd like to get the consent of the companies.

We want them to be on board.

I think

that if you think about it from, you.

No, here's the nuance.

Let's say you're an accredited high net worth individual.

There are ways to get exposure to these companies

without the company consent, right?

They just don't care.

But but legally, you have a you could become

LP and and in an SPV that exists, so there's these ways

where companies have already lost control of who their shareholder basis.

And not to mention when they go public, you're completely

you've completely lost control of your shareholder base.

So, I think since it's early,

obviously our approach is we want to make sure everything is,

we don't want anyone saying they don't want to have they don't want Robinhood

Ventures, invest in their company and throwing ice water over it.

Not to say that that's going to be the policy forever, but that's kind of the

that that's the approach we're we're taking now.

I'm mindful of the time.

So I just want to ask real quickly, do you want to just drop your new card

on the table? I know, oh my God.

So you have the we can just, we don't need to do a big like and for,

like, all the great people could look that up,

but you have this new platform platinum card.

It's really bad. OpSec if he's, like, dropping his credit card.

No, I just want to hear how it sounds.

It's, it's it's the most secure credit card on the market.

Your number is not on it. Oh. All right.

Oh, that is legit.

Would you like to hold it I would I yes.

So this is nice.

This is really nice.

I got the heaviest card on the market.

Beats out the Robinhood gold. Yeah. Wait.

Actually drop the gold card. Now. Let's hear the difference.

Very different that no one wants that pewter.

Gold. You're disappointing. Here's the platinum drop.

Yeah, let me drop the platinum one.

So let me tell you, I can tell you the thesis behind this card,

if it makes sense.

We want this to be, like the James Bond card.

Yeah. No, if you if you are James Bond,

this is the card for you.

If James Bond, Sean Connery himself were to have a credit card,

he would have this card.

And I think we tried to evoke that feeling,

not just in the design of the card, but if you if you look at the website.

Yeah, we have a scuba diver.

We have like these nice planes.

So yeah, we, we really

my friend, if I pay, if I pull that out, my friends won't make fun of me.

No, I will tell you if you pull that.

Actually, I really like it.

Well, actually, it's got 5% dining credit.

That's probably that's that's like, nobody offers that with the high limit.

So it's actually intended for you to treat your friends, okay and take it out.

You're not going to be.

They're not going to make fun of me when I'm paying for dinner.

And and then what we found was with the gold card.

A lot of people a lot of people don't really use physical cards anymore.

It's Apple Pay.

But the moments when you use your physical card, it's less of a payment instrument.

It's more like a let me show you my watch. Right.

It's it's a it's a fashion accessory.

It's a luxury. Good.

And I don't know if the credit card industry is really has really evolved

I think the same degree it iPhone.

You know you have the orange iPhones

now it's it's a fashion accessory less of a utilitarian good.

And I think physical cards the same way.

It used to be that people wanted physical cards that were as light as possible.

Yeah, because it served a utilitarian purpose.

You want to keep it in your wallet.

You want your wallet to be light so that you're not hunched over.

Now, I think it's a little bit different.

It's an extension of your personality.

So I'm a big fan of physicality

in everyday products like remember the The Cube?

The tungsten cube. Yeah.

Oh yeah, I like that was a direct response to like the ephemerality of crypto.

Yeah. Of crypto. Right.

Like you want something that's tangible and like feels heavy in your heart.

I keep telling, Deepak that a tungsten card for crypto people would be cool.

Yeah. Get on that.

Oh, you should do that. Yeah.

Not a bad idea.

Vlad Tenev. Thank you so much for, coming back on Odd Lots.

Great chatting with you. Yeah, always a pleasure.

Thank you guys.

Tracy, I love catching up with Vlad.

I mean, Robinhood is a company that is like,

so far ahead of the curve in basically everything that's happened

with, like, the retail ization of every market.

The complete breaking down of every distinction between

what's a stock, what's a future, what's a token, etc.

like they're right in the middle of all of it. Absolutely.

And also there's a reflexivity here, right.

Because the bigger Robinhood gets for its offerings

kind of matter for the way the market itself behaves.

So I think it's definitely a worthwhile discussion.

I got to say though, like the the financialization

of everything, I do find a little bit dystopian.

I remember like I went to Macau once and, never been there.

I was really looking forward to it cause I was thinking,

you know, the Las Vegas of the East.

But a lot of the gambling I found, like, pretty depressing

because some of it was as basic as, like, let's roll the dice.

And if it's a high number, you win.

And if it's a low number, you lose.

And taking like, those kind of very simplistic binary bets.

Yeah.

And I feel like

I feel like a lot of that is sort of creeping into the financial system.

Yeah.

I mean, in our daily lives, people bet on the coin flip of the Super Bowl.

Yeah, I know why even have the Super Bowl at that point?

If people are, they're just betting on a coin flip.

The Super Bowl is kind of an irrelevancy if people are inclined to bet on

the coin flip.

I don't know if like, people will bet on a coin flip, but it's not like that much.

It's basically the same thing, like betting on red or, black, red or black,

which people do which people do online, which is really depressing,

actually, the most depressing thing I've ever seen on the gambling front was,

I was in Iceland and I think they have this.

I do not think of.

Iceland is like a hub of gambling. Let's go on.

Like I was looking for, stuff to, watch on TV and that whole room,

and they had a stream, or they had a video of, like this,

like video casino, where they had, like, an attractive woman

dealer dealing cards, and then people could phone in their bets.

Oh, wow.

So, like, recreate the recreate kind of this casino

ish thing, but, like, it seems like that's we're going.

And then the other thing too is that as I mentioned, like

whether it's like technological arbitrage or regulatory arbitrage,

every type of that can be turned into you.

Done with any type of instrument, you can replicate stock and options with futures.

You can do sports betting in the form of in the form of prediction market.

You can then take prediction markets. You've already seen this.

You can take prediction markets and bundle them into ETFs.

And so you could have buy an ETF.

There is a series of long Democrat in the Senate markets etc..

And so everything could be wrapped in every other sort of wrapper.

And everything is just sort of seemingly once you find the right wrapper

kind of allowed within their current sort of like regulatory framework.

And honestly, even if it's not allowed, you do it offshore with crypto, etc..

And so there's almost no way to sort of stop this, stop this progression.

But the other thing I've been thinking of is, you know,

we used to hear of markets

described as, you know, there were upsides to capitalism, right?

Like you're supposed to be efficiently allocating money.

I still think there is some pretty good upside, of course. Of course.

But like that used to be the thing. Right.

And now you see more and more money that's kind of being diverted

away from like, well, this is just going to fund a company.

Yeah.

Well we're just going to bet on the line in the company going up or,

you know, some other real world outcome or whatever it feel.

Here's what it is.

We were talking about this the other day, but like, it actually

feels like if you think about the 1980s, you had that greed as good.

Yeah. Yeah. Right. Right. And even that was controversial.

And now you fast forward to 2026.

And it feels like morality doesn't even like necessarily enter into it.

Everyone is just like so resigned to this idea that like, well,

of course people are going to try to make money.

Of course we're going to just bet on random things to try to win.

Everyone just accept that.

Like securing the bag is is the is.

The one other thing I do worry about is like,

I think American capital markets are good, in part

because we really do have excellent disclosure.

And, you know, from time to time you hear about like an accounting scandal,

but they're rare, like, and they're a lot rare.

I think anyone who looks in

any other market around the world would find them way more frequent.

And, market manipulation would find it way more frequent in other markets outside

the US because we have this very good regulatory regime and expectations.

And the SEC mostly does its job very well.

And it's going to increasingly sort of like be taken over by tradable instruments

for which investors really do not have the same level of information at all.

And the expectation that an investor would like be able to know the share

count of a thing they're buying, or would be able to know the earnings

or the margins of the thing they're buying, like that's going away.

And we might regret, like having so much, traded

without as much transparency at some point down the line.

No, absolutely. Actually, this is a good reminder.

I wanted to call back to two episodes.

So on that note, we did that really good episode about private credit

in particular, kind of turning the economy into a black hole.

Yeah. Remember that. That's hey, I think that's really good.

You know, obviously it's focused on credit, but you can extrapolate

to more and more companies just going private in general.

And then secondly, Vlad mentioned he's really into aliens.

Yeah.

We got to get Paul Krugman back on tto talk about aliens.

Let's do it.

But in the meantime,

there is an existing episode that people should check out anyway.

Shall we leave it there? Let's leave it there.

Okay. This has been another episode of the Odd Lots podcast.

I'm Tracy Alloway. You can follow me @tracyalloway

And I’m Joe Weisenthal You can follow me @thestalwart

Follow our guest Vlad Tenev he’s @VladTenev

Follow our producers Carmen Rodriguez @carmenarmen,

Dashiel Bennett @dashbot and Cale Brooks @calebrooks

And if you want more Odd Lots content, you should definitely check out

our daily newsletter.

You can find that@bloomberg.com/oddlots

And you can chat about all of these topics 24-7

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