Editor's Note: Robinhood recently launched Robinhood Chain, and the new round of meme frenzy based on this network has reignited the long-dormant cryptocurrency market. It has even been seen by some optimistic investors as the beginning of a new cycle in the industry.
Last week, Robinhood's co-founder and CEO Vlad Tenev participated in the Master Investor podcast. During the show, Vlad Tenev outlined Robinhood's development history and path to success. Moving from meme stocks to meme tokens, Vlad Tenev also discussed the tokenization of assets and the investment value of the private equity market, emphasizing that "retail investors are the real smart money."
Below is the full transcript of Vlad Tenev's participation in the Master Investor podcast (with some editing for readability):
Opening Remarks
Host: Welcome to the "Master Investor" podcast. I'm your host, Wilfred Frost. In this show, we engage in conversations with the world's most successful investors, business leaders, and political figures, sharing their experiences and thoughts behind their success, hoping to provide our listeners with more investment insights.
Today's guest is Vlad Tenev, co-founder, chairman, and CEO of Robinhood. Robinhood is a financial trading app that has truly popularized commission-free trading and brought many industry innovations based on it.
Robinhood was founded in 2013 and went public in July 2021 with a market capitalization of around $32 billion. However, in less than a year in 2022, during a market-wide pullback, the company's stock price dropped by about 80%, shrinking its market cap to around $6 billion. Now, Robinhood has made a comeback, with a market cap approaching $1 trillion, currently just over $900 billion, and the platform's assets under custody reaching $380 billion.
They are back, and stronger than ever. We are thrilled to welcome Robinhood CEO Vlad Tenev to Master Investor.
Vlad Tenev: I really enjoy this walk down memory lane.
Host: Which part of it has been most enjoyable for you? The upward journey or...?
Vlad Tenev: It must be now, right (laughs). Yes, now is the most interesting time.
Historical Review: The 2022 Great Pullback
Host: Let's start by discussing the great pullback of that year. This is not just the history of Robinhood, but the history of the entire market.
You have a keen insight into the behavior of almost all traders, especially retail traders. So, during that market pullback, before both Robinhood's own stock price was hit, did you see any signs of a bubble from your customers' trading behavior?
Vlad Tenev: Yes, I did have some suspicions during the pandemic, but I wouldn't directly call it a "bubble."
If you remember, in 2020, the U.S. government started printing money on a massive scale, directly distributing stimulus checks to households. But at the same time, if you looked at various indicators predicting the inflation level, no one thought inflation would rise significantly.
For example, at that time, the long-term inflation expectation reflected by the 10-year U.S. Treasury bond yield remained around 2%. I was thinking, how is this possible? The government kept printing money, but inflation did not rise.
The government did not invent a perpetual motion machine; it cannot violate economic laws. So, at some point, one assumption would be shattered. Therefore, personally, everything that happened later was not actually surprising to me, although it may still be a surprise to the entire market.
By the end of 2021, inflation began to rise significantly, eventually hitting new highs in decades, surpassing any period in the past 30 years. And when you see inflation rise from nearly zero to 9% or 10%, you will inevitably face a policy response — interest rate hikes and a tightening monetary policy.
In my view, this was almost inevitable and entirely foreseeable.
Host: So, can we simplify things by saying that what truly triggered the market correction was the subsequent high inflation and interest rate hikes? Or was there actually some signs of overvaluation in the market before this?
I'm mainly referring to the Meme Stock craze. Looking back, should we have realized that these companies were not profitable, yet their stock prices were doubling within an extremely short period?
Vlad Tenev: I think all these things are fundamentally interconnected.
If we look back at the timeline, the most famous round of the Meme Stock craze happened in January 2021, just a few weeks after a large-scale fiscal stimulus was rolled out in the U.S. We can also see this very clearly from Robinhood's data.
Whenever the government issued stimulus checks, just within days or weeks, we saw a huge influx of funds into the market. If we look back at the tremendous growth Robinhood experienced during the pandemic, there are actually several key reasons for this.
Firstly, people had almost nowhere to spend their money. All offline activities came to a halt. Everyone was staying at home, making various digital activities—including stock market investing—a still-open option.
Secondly, people had more time on their hands. They could learn about investing, follow YouTube influencers, and engage with various financial content creators.
Additionally, interest rates were brought down to zero at that time. If you recall, in 2019, the Fed was continuously raising rates, and the federal funds rate had risen to about 2% or more. However, in 2020, after the outbreak of the COVID-19 pandemic, the Fed promptly cut rates back to zero.
Built upon this zero interest rate environment, there were also multiple rounds of fiscal stimulus packages. All these factors were actually working together to drive the stock market up.
Of course, in March 2020, the U.S. stock market experienced a severe plunge. However, it was just a short-lived crash that quickly formed the typical V-shaped recovery. If there hadn't been such rapid and massive fiscal stimulus along with loose monetary policies, the outcome could have been entirely different.
Host: Very interesting. I happened to be working at CNBC at that time, and our viewership also surged significantly during that period. As you mentioned, people had nothing else to do, so naturally, everyone's attention shifted to the capital markets.
Vlad Tenev: That's right. Everything was shut down, except the market.
Retail Investors and Smart Money
Host: The reason I chose to start with this topic is because later on, I want to discuss another issue — do you think today's market is similar to back then? But before we dive into that topic, I want to chat about something else.
I heard that compared to other institutions, your clients — largely retail through Robinhood — have actually outperformed in the market. Over the past few weeks, we have interviewed many guests, and they have all talked about the topic of "Smart Money" and "Dumb Money."
And now, more and more people are beginning to believe that the real "Smart Money" is actually retail investors. Whether it's in October 2022, April 2025, or March 2026, they have successfully bought the dip in the market downturn. Does this trend still exist now? Are your clients still ahead of the curve compared to others, willing to buy when prices are cheaper?
Vlad Tenev: That's right, I've always believed this. Many times, the so-called "Smart Money" may have been a bit too clever, which may not be a good thing.
Institutional investing today has become increasingly indirect and abstract. Fund managers are more focused on observing the macro environment, constantly adjusting their portfolios based on various macro indicators. Many times, they sell a particular stock not for any fundamental reason related to the company itself.
For example, simply due to macro factors like tariffs, they choose to sell. Tariffs force them to reallocate more funds, so you end up with a seemingly counterintuitive situation — they sell a company like Palantir, even though this company may not be affected by tariffs at all, and may even benefit from them.
On the other hand, retail investors' approach is much simpler. They buy and sell stocks because they believe a specific company will do well in the future. Therefore, when faced with macro events such as tariffs, interest rates, retail investors often show more resilience.
They focus on questions like, "How is this company performing," "Do I like its products," "Is the revenue growing," "Is the profit margin increasing," "How is the Rule of 40 performing,"...
These are still relatively advanced analyses. However, they will not simply liquidate their stocks and shift to fixed-income assets just because of the "Russia-Ukraine conflict," which is a common practice among many institutional investors.
Is There a Bubble in the Current Stock Market Similar to 2022?
Host: Next, I would like to specifically discuss Robinhood. As mentioned earlier, you completed your IPO in July 2021, and shortly after, the entire capital market entered a very challenging period.
Do you feel that you actually caught the last bus? Because in the following years, the capital market was not very friendly to IPO trades like Robinhood.
Vlad Tenev: Yes. The IPO market's window basically closed for several years. Since we later launched the IPO Access product, we had a more firsthand observation of the entire IPO market.
After the IPO window closed, it took a few years for a crack to finally appear. The IPOs of ARM and Instacart can be said to be the two companies that first reopened the market. I remember it should have been in 2023; they can be considered somewhat as a precursor to the subsequent comprehensive market recovery.
It was only last year that the IPO market was fully reopened.
Host: The reason I took such a detour is actually to ask, do you now feel a sense of déjà vu about SpaceX's IPO? Just like Robinhood back then — you successfully went public before the market closed; if you had waited a bit longer, you might not have had such an opportunity because the market then experienced two years of decline.
Now SpaceX has successfully gone public, and everyone is now watching to see if all these other companies can follow suit. Because OpenAI has now indicated that they may not attempt to go public for the time being. Does this give people a sense of déjà vu? How do you see the current market dynamics compared to back then?
Vlad Tenev: Now everyone is discussing one question: "Are we in the midst of an AI bubble?"
I think what complicates this question is that there are now a large number of companies pouring massive amounts of money into AI, while the AI industry has also developed a relatively clear business model.
These Model Companies sell tokens to corporate clients and individual users, with OpenAI also having a sizable subscription business. Therefore, unlike many past bubbles, today's AI companies have real business models and sustainable revenue growth.
The real question has actually become whether those enterprises that are paying a lot for AI will transition from the current stage of "willingness to continuously learn, temporarily disregarding costs" to a stage more focused on return on investment (ROI). If they start rigorously measuring ROI, will the revenue from each customer continue to grow in the future or will it decrease instead?
On the other hand, there is another crucial factor: a significant number of enterprises have yet to truly begin using AI, and the same goes for consumers. For example, consider Claude Code, whose user base is probably only in the tens of millions, far from reaching hundreds of millions or even billions of users. Therefore, the entire market still has a very long growth runway. It is precisely because of this that, despite having real revenue today, I still believe the entire AI industry is in a very early stage of development.
Therefore, I think the logic of judging the timing of an IPO today is actually different from the past. Another point I have gradually realized over the years is that, regardless of the era, we always feel like we are standing at a very crucial historical moment, as if everything happening before us is unprecedented, as though we are on the edge of some massive change.
However, looking back, these market cycles are actually becoming shorter and shorter. For example, as we mentioned earlier, the IPO window closed at the end of 2021 and reopened in 2023. If you look at it over a longer period of time, you will find that this is just a sinusoidal cycle of fluctuations.
No stage is permanent, and even if the IPO window temporarily closes, it may not take ten years to reopen.
Host: From the customer behavior you have observed, do you currently see any warning signals similar to the 2022 market correction?
Of course, SpaceX is clearly not a Meme Stock. It is a trillion-dollar company. However, some may compare it and say that, similarly to when its profitability was insufficient, it was driven up to a very high valuation by the market and may fall again in the future.
I am not equating it with GameStop. What I mean is, have you seen any signs from customer trading behavior that remind you of the market adjustments before 2020, 2021, and 2022?
Vlad Tenev: I believe that the majority of the companies our customers are investing in today are large enterprises with real profit-generating ability and leading the way in their respective industries.
You mentioned SpaceX earlier, and in addition to that, there are companies like Nvidia, Tesla, and other chipmakers. Recently, the entire chip industry has been performing quite well, and our customers are very interested in this sector.
So I think the biggest difference between today and 2020, 2021, is that back then, there was what I call a "nostalgic" investment sentiment. Many of Robinhood's users are millennials, and they were investing in companies that they saw as unfairly affected by the policy changes during the pandemic, such as retail chains like GameStop, movie theaters, airlines, rental car companies, and so on. Even in the most optimistic scenario, it's hard to argue that these businesses were at the forefront of technological innovation. In fact, due to market conditions, the COVID-19 pandemic, and trends like online entertainment and streaming, they were somewhat part of industries being disrupted by the times.
Today is a whole different story. The companies our customers are investing in are mostly those that are actively disrupting their industries, positioning themselves at the forefront of their respective sectors. Of course, there can be debates about price-to-earnings ratios and various valuation metrics, but I think one point is almost indisputable — these companies are indeed changing the world.
The Path to Success in the Eyes of a Founder
Host: Let's bring the discussion back to Robinhood. Before we talk about today's Robinhood and its future development, I'd like to take a look back at the past.
Looking back, what do you think was the fundamental reason that allowed Robinhood to rapidly penetrate the market and gain user recognition in its early entrepreneurial days? I know commission-free trading is definitely one reason.
Vlad Tenev: I believe that the widespread resonance of the Robinhood product was the result of three factors working together.
Firstly, as you mentioned earlier, commission-free trading. At that time, other brokerages were charging $7 to $10 per trade, while we were completely free. As a result, we not only successfully attracted a new group of users — mainly young people who didn't have one or two thousand dollars as initial investment capital.
Later on, we also attracted a large number of active traders to the platform. For these active traders, even if our platform was somewhat lacking in features or tools compared to other professional brokerages, they were still willing to use Robinhood if they traded a hundred or even a thousand times a month. From an economic perspective, the value brought by zero commission was just too significant. So, at least in terms of the business model, we were ahead in the competition.
Secondly, apart from being the first to introduce zero-commission trading and establish the business model now widely adopted in the industry, we also pioneered mobile trading. Robinhood can be said to be the trailblazer of the entire brokerage industry's migration to mobile. Before Robinhood emerged, although some brokerages had launched mobile apps, mobile trading was merely a supplementary product, a kind of afterthought.
Our bet at the time was that mobile internet would undoubtedly become the future, and people would primarily manage their financial lives through their phones. This was not just because phones are more portable, but because mobile devices themselves have many practical advantages. Therefore, right from the initial product design, we focused on creating a platform based on mobile. I believe Robinhood truly created the concept of a mobile brokerage industry and propelled it into the mainstream form we see in the market today. Robinhood has always been a leader in this field.
Thirdly, and what I believe is a crucial point, is the values represented by the company Robinhood. If we go back to the 2008 global financial crisis, many of our users were at a pivotal stage in life. I graduated from college in 2008 and then entered my graduate studies. In the first month of my graduate program, my co-founder Baiju had just started working.
It was at that time that Lehman Brothers collapsed, and the global financial crisis officially erupted. For our generation, our most significant sentiment towards the financial crisis was — it was a problem created by the financial industry itself, yet ultimately, the entire society had to bear the cost.
Financial institutions made wrong decisions. The costs of the crisis were to some extent shared by society as a whole, but those who should have been held accountable were hardly punished. The benefits of the post-crisis economic recovery flowed back to the financial sector, to those who already had assets, and to some extent, the "insiders," the wealthiest 1%.
Subsequently, this gave rise to the Occupy Wall Street movement and shaped a prevailing sense of loss among an entire generation of young people in the early 2010s. Therefore, I believe that people at that time actually urgently needed a new solution.
And Robinhood offers exactly that kind of solution. It tells everyone that instead of completely giving up on the whole system, it's better to truly participate in it. It is for this very reason that I believe the Robinhood concept itself has a very powerful force because it truly represents Ownership. A future that belongs only to a few will be an extremely fragile future. We want everyone to be able to own assets. We believe that widespread asset ownership is an essential foundation for a free, stable, and prosperous society.
I believe that this concept has truly touched many people. And it was the combined effect of these three factors that ultimately made Robinhood the fastest-growing brokerage at the time.
Are There Still New Stock Investors in the Market?
Host: Earlier you mentioned that not only did you take market share from other brokerages and attract some users who were already trading on other platforms, but I think more importantly, you actually created a group of new investors who would not have entered the stock market otherwise.
So, how do you view the penetration rate of the U.S. market today? Not just Robinhood, but the entire retail investment market. Apart from generational shifts, are there still many people in America who will enter the stock market in the future? Or has the development of the past decade essentially captured the easiest-to-reach users?
Vlad Tenev: I think there is still a very large space. Currently, the participation rate in the U.S. stock market is about 65%, meaning approximately two-thirds of people hold stock assets.
Looking back at history, I remember there was an episode of the Acquired podcast about Vanguard, where they illustrated the development curve of the U.S. stock participation rate, highlighting several key inflection points.
The first inflection point was when U.S. companies widely adopted the 401(k) employer retirement plan, which increased the stock market participation rate from about 20% to nearly 50%. Then, after the global financial crisis, this ratio stagnated for a while. Then on that chart, you will see another important milestone— the birth of Robinhood, which raised the stock participation rate from over 50% to today's over 60%, and it is still steadily rising.
The question now is, can we raise this number from 60% to 90%? Or even eventually close to 100%? Of course, achieving one hundred percent might be very difficult as there will always be a portion of people who will not participate in investing. But I believe reaching above 90% is entirely possible.
In order to do this, the key is that many people are not eligible to participate in the employer-sponsored 401(k) plan. So, can we get them a brokerage account? Get them investing? Even start investing from childhood? That's why we are very excited to partner with BNY Mellon to become the sole initiating broker and trustee for the U.S. Trump Accounts initiative.
This initiative will open a brokerage account for every newborn in the United States. Funds will be invested in a highly diversified portfolio of publicly traded companies from the moment of their birth. I believe this may just be the beginning. In the future, it is expected to truly raise the U.S. stock market participation rate to over 90%.
Robinhood has recently expanded to the UK market. Compared to the U.S., the UK is even more "behind," with only about one-sixth of Britons currently holding stock assets, and there is no reason to think this cannot change.
Looking at the entire brokerage industry in the UK, you will find that many large traditional brokerages still do not offer zero-commission trading. Unlike the U.S., these full-service brokers in the UK have not truly embraced this business model yet, but it's only a matter of time.
In the long run, they will all have to move towards zero commissions. The real industry revolution in the UK market has not actually happened yet.
Robinhood Chain and Asset Tokenization
Host: Next, let's talk about cryptocurrency. Robinhood has just launched the Robinhood Chain mainnet. For those unfamiliar, what does this mean?
Vlad Tenev: It is essentially a blockchain, specifically a Layer 2 network built on Ethereum using Arbitrum technology. Our goal is to make it the best blockchain for Real World Assets (RWA).
For a long time, when people talked about cryptocurrency, they usually thought of assets like Bitcoin, Meme Coins, which don't actually represent anything in the real world.
For over a year now, Robinhood's entire crypto strategy has been about one question: can we truly leverage blockchain technology to turn it into the infrastructure for real-world assets? This way, assets with real value and utility can also operate on the blockchain, making it easier for more people worldwide to own these assets.
Therefore, in launching Robinhood Chain, we have also been advancing our asset tokenization strategy. Last year, we held a conference in Cannes, France. There, we officially unveiled Robinhood's long-term asset tokenization roadmap.
At that time, we posed a question: What is the real value of asset tokenization? My answer was, just like stablecoins.
Stablecoins allow people from hundreds of countries and regions around the world to easily access the US dollar. In the past, obtaining US dollars was a very challenging task for many people in different countries. Stablecoins have solved this problem. In the future, asset tokenization will also play a similar role, bringing the value of US stocks to the entire world, enabling those in countries and regions with far less mature financial systems than the UK or the US to more easily hold US stocks.
Therefore, on Robinhood Chain, we will launch Stock Tokens. These Stock Tokens will be available in over 120 countries and regions, where users can use their own non-custodial wallet or the Robinhood Wallet—our proprietary wallet product.
We aim to provide a very user-friendly experience that allows users to easily trade and exchange Stock Tokens. Through these tokens, users can gain exposure to the entire US listed stock market. In the first phase, we will support around 2000 US-listed stocks, and these Stock Tokens will be available for 24/7 trading.
Furthermore, they also have 'Portability.' This means that users are no longer entirely reliant on a single broker as a counterparty. As long as the blockchain network continues to operate, these tokens can freely move and be exchanged.
Host: Are these Stock Tokens backed by real assets or are they just synthetic assets? Do you always truly hold the underlying assets? Do you need permission from the asset issuers?
Vlad Tenev: We will always adhere to 1:1 real asset backing. Even if there are any issues with Robinhood in the future, the asset exposure they hold will remain secure. With this relaunch of the Stock Token product, we have further clarified the entire product architecture.
Host: What I really want to ask is, since you insist on a 1:1 real asset backing, does a company always have the right to prevent its stock from being tokenized? Especially those privately held companies that are not listed.
For example, suppose Robinhood itself bought a portion of Stripe's shares in the secondary private market. If these shares are from employee stock ownership, can Stripe prohibit these shares from being tokenized in the future through its bylaws? Or, are you willing to proceed with this as long as you legally acquire the shares, even if it may lead to legal disputes?
Vlad Tenev: Yes, in the past, we have indeed experienced some disputes like this, not with Stripe, of course, but with some other companies.
In fact, we currently have two different models. The first one is the stock tokenization I just mentioned. The other model is the Robinhood Ventures introduced in the U.S. now.
Currently, the development of this business has been quite good. Its core goal is to think about how to use traditional financial tools (TradFi) to allow retail investors to also access investment opportunities in these high-quality private companies.
Ultimately, we have designed a closed-end fund structure. You can think of it as a publicly traded venture capital firm.
It invests in a basket of assets of private companies. Currently, the fund has invested in several companies including Stripe, OpenAI, SpaceX (pre-IPO), UK fintech company Revolut, and other outstanding companies.
One of our key principles has remained unchanged; we will respect the issuer's wishes. Of course, we always prioritize shareholder interests. We believe that retail investors should also have the opportunity to invest in these excellent private companies; we also believe that in the long run, issuers will ultimately accept that this will become a common practice.
Can AI Change Retail Investors' Trading Patterns?
Host: You have previously mentioned in many podcasts that you are using AI to enhance user experience. And you emphasized that you hope the core capabilities can be developed on your own, rather than relying entirely on external sources, because only in this way can a true competitive advantage be established.
If we were to say that Robinhood's rise in the early days came from zero-commission trading and being the first to focus on the mobile end, what do you think about the next five years? Which brokerages that truly harness AI well do you believe can further gain how much additional market share?
Vlad Tenev: I've always had a viewpoint — in the future, humans will always be personally involved in trading.
At the beginning of my career, I was involved in High-frequency Trading, which you could say was one of the earliest use cases of AI. Of course, back then, it wasn't called AI; it was referred to as Machine Learning.
At that time, high-frequency trading firms had already started acquiring GPUs. We were even among the first group to use NVIDIA CUDA architecture accelerator cards. NVIDIA launched the first generation of Tesla accelerator cards around 2010. I remember when I was doing high-frequency trading, we were among the first to get our hands on these products.
We used GPUs to calculate securities prices and develop trading algorithms. Therefore, the financial market had already been digitized a long time ago, with quant funds continuously developing increasingly complex trading strategies and deploying them in the market.
Before the emergence of Robinhood, many people even believed that high-frequency trading would eventually take over the entire market. However, Robinhood's appearance later led to a huge revival in retail trading.
Retail traders returned to the market, and humans once again began trading themselves. So, I believe there will always be a balance between the two.
The truly interesting question is, can we open up those strategies and tools that were previously only available to top hedge funds and high-frequency trading firms to ordinary investors?
These tools are very different from the trading methods retail investors use today. But can we enable ordinary people to easily use these capabilities without needing a computer science degree? I think that is where the real anticipation lies.
In my view, this is more like popularizing software engineering capabilities rather than just stock trading.
Host: So, will this ultimately make the entire market more efficient?
Vlad Tenev: I don't think so. Of course, there are already a lot of algorithms engaged in automatic trading, but it is still humans who make the actual decisions.
Host: But what if in the future, every retail investor has the same AI and just needs to click "Enable Auto-Trading"?
Vlad Tenev: If all retail investors use the same AI agent, then the advantages it brings would likely diminish over time. The incremental value it can create would also decrease.
Host: Does that mean human traders would once again have an opportunity?
Vlad Tenev: Exactly. The financial market is inherently a highly complex, dynamic, and chaotic system. Therefore, I believe that humans and AI will ultimately reach a balance.
Final Investment Advice
Host: We're almost out of time. As is customary on the show, I'd like to ask you one final question. For our audience, what is the most important piece of investment advice you have?
Vlad Tenev: I have to answer this question carefully (laughs). The reason I have been working so hard to promote the development of the private equity market is that many of the companies we mentioned today (such as SpaceX, OpenAI, Anthropic) are either already going public at trillion-dollar valuations or are likely to go public at multi-trillion-dollar valuations in the future.
Therefore, we are currently in a very delicate stage. More and more value creation is being shared among an increasingly small group of wealthy insiders, who are becoming richer as a result. The era where ordinary investors could buy stock in companies like Microsoft or Amazon at valuations of just a few billion dollars and then achieve returns of 1000 times or even 10,000 times in the public market is becoming increasingly rare.
Thus, we have always hoped to make it easier for companies to enter the public market. We have been tirelessly working towards that goal. Of course, there is also a possibility that even if our efforts succeed, we may still not be able to change the reality.
Because companies can still easily raise funds from the private market, and private funding may even become increasingly accessible in the future. In that case, they may still wait to go public until they reach trillion-dollar valuations.
Therefore, we must open the door to the private equity market. That is why I am so passionate about Robinhood Ventures. I believe this is Robinhood's next truly important crusade.
Our mission is to enable the private equity market to realize Private Markets. To allow ordinary investors to participate in the development of these companies as early as possible, with full security and robust risk control mechanisms.
Because the earlier the stage of the company, the higher the risk, but at the same time, the potential return is also the greatest.
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