Building Robinhood, Surviving GameStop & A $500 Million Phone Call | Vlad Tenev

You and I have a mutual friend in Mickey Malka. I'm a massive fan of his. In fact, I called him this morning and we were talking about you. Why is Mickey so special? Like why do you think he has the reputation he has with the founders? You know, a bunch of founders that know him just like I do. And it's like, it's very hard to find anybody that has a better reputation with founders than Mickey Malka. Yeah. Mickey Malka and I have known each other for a long time. You know, Ribbit got started basically around the same time as Robinhood. I remember meeting those guys, Ribbit, when they were working out of the social capital office in downtown Palo Alto. They didn't even have their own office yet. I probably shouldn't be telling you this, but they actually passed on Robinhood at first. So, you know, we were excited to meet them. I pitched Mickey, Nick and Nikolai. This was our seed round at a 10 million cap. And it didn't end up getting done, even though I was very excited because it's like this is a fintech focused firm. Fintech wasn't even a thing when Robinhood got started. You can look at the Google trends. It was like zero. And then, you know, a couple of years later, people started using the term, you know, and he'll give me excuses about why they didn't do the deal at the seed, like, oh, you know, we weren't set up. It wasn't in our mandate. It was too early stage for us. But you and I both know Mickey's the type of guy when he wants something, he'll find a way to get it done. Right. I mean, he invested over half a billion into Robinhood in the span of probably 30 to 45 minutes in 2021. I think that. With Mickey, especially, but also with with all of our investors, the best ones. There was a period of us sort of like getting to know each other and earning each other's mutual trust. And with that one, you know, I'd say the relationship kind of grew and compounded over time. So they ended up investing in the Series A with index and becoming board observers. And I remember having a particularly contentious discussion with Mickey around that time because I forget exactly what we were talking about, but I think he wanted more protections than I was willing to give. He either wanted to be on the board or wanted to be an observer. You know, as a founder, especially early stage, you're kind of taught to be extremely protective about board rights. So I was kind of negotiating against him. And I remember I was like walking around next to our office. There was this little park in South Palo Alto, and I was just doing paces around this tiny park. And he's like, you know, Vlad, you're going to learn this about me. I'm going to be, you know, the only investor that you're actually five years from now, 10 years from now, you're going to say, you know, I wish you were more involved and you're going to want me on your board. And of course, at the time, I'm like, OK, well, everyone probably says this exact same shit. But yeah, I think time and time again, in the moments that mattered, he sort of proved that he had our back, my back personally, and sort of like the best interest of the company. So Mickey has this very unique thing. And I think. At first, when you meet him, he's probably I mean, he's a particular person, probably not everyone's cup of tea. He's not someone that you like immediately, like necessarily kind of had a tough exterior is a giant man, you know, probably puts up quite a bit of weight in the weight room. He's got like a aggressive temperament. These are my favorite kind of people, by the way. Yeah. So me and him click from the very first time. So the way he kind of challenges me and the company, he does it directly. It's clear. I never worry about whether he has the best interest of me or the company. So I think our trust has just grown over time and multiple times he's kind of been there to help the company in our most important moments. He was a board observer in Robin Hood before we went public. You probably know this, but typically when you go public, all the observers go away. And in fact, most of the board members who are venture capitalists end up rolling off the public boards because that's not the business they're in. So Mickey was actually the only one. He got promoted on our board. So he rolled off when we went public. And then I came back to him six months later and I'm like, hey, we'd like for you to join this company as a public company, as a full board member. Why did you do that? Because I just valued his counsel so much. When you're a public company, you get to pick your board members by and large. And, you know, when you're private, it's the investors and it's sort of you pick them, but it's a negotiated deal that the investor owns the board seat. So sometimes you have situations where maybe you get along with a certain board member and then they leave the firm, but it's the firm's board seat. So they get to decide what happens with it. Public company, you pick your board members. And so I have the luxury of being able to select the people on the board now. You referenced at the beginning of our conversation that he dumped half a billion dollars into Robinhood in like 30 to 45 minutes. Can you tell the story? The story actually goes back to March of 2020. So when he actually dumped that money, it was January of 2021. But eight months earlier, March of 2020 was a big inflection point in Robinhood's history. So it was the beginning of COVID. And I'll set out the scene for you. We're in this office or the one across the street. And we basically occupy the Sunset Magazine headquarters right now. And Sunset Magazine, as you maybe don't know, but has two large buildings. There's like the one we're in and the big one across the street with a giant garden. Anyway, there was a running joke because we first moved into the smaller one, then we got the big one. You know, our CFO would constantly have to answer when we're moving into that building because the date kept getting moved back and back. And it's an old building. They had to do a lot of retrofitting. Anyway, March of 2020 was our move-in date. So we mark it with a big hackathon. So over the weekend, we have a hackathon. I remember it was kind of a sad hackathon, kind of poorly attended. Because of COVID or not related? I don't know. I think just like there was a little bit of a malaise. I don't know if it was COVID related or we just were kind of going through the motions and we didn't really hype it up enough, but not very many people hacked. And then the following day, Monday, March 2nd, 2020, we had a massive day-long trading outage. And this day was like a huge upswing in the market. So there was some up and downs. COVID had started. The market had gone down. And that Monday, it went up. Our infrastructure basically failed. And we had a day-long trading outage, which was very nerve-wracking. Because you're a financial firm, you know, people, customers depend on you to trade. And for me personally, as an engineer, I take any infrastructure engineering issue very, very personally. I feel like I'm failing at my core competency. So that happened. We got through it. And a week later, everyone went home because we had the start of lockdown. And I remember it was a very confusing time because all the companies that were sort of in our peer group at that time were taking precautions. They were planning on cutting headcount. A lot of them were doing layoffs. What did you consider your peer group back then? You know, like Airbnb, DoorDash, those types of companies. But I think it was... Just tech startups. Yeah, tech startups. But it was beyond that. I mean, there was just pessimism and, you know, the market had crashed and people just assumed that we were going to be in dark times for the next couple of years. We didn't really know which way it was going to go because when you looked at our numbers, we were just seeing crazy numbers. User base was growing, revenue was growing, volumes were growing. So COVID at first seemed like it would be like a headwind, a risk that we would have to manage. And then it became pretty clear that it was just a huge accelerant to the business. But as part of our business accelerating quite dramatically, we encountered the capital requirements for the first time. And the way that basically that works is since we're a regulated broker, depending on how much activity there is on our platform, we have to set aside corporate cash, business cash to like support that activity. And we started noticing during March that, you know, the volumes across equities and options were going parabolic and our capital requirements were increasing as well. And so I call up Mickey and I'm like, hey, things are really good right now. Revenue is growing, business growing. Not sure how sustainable it is, if I'm being honest, because it's like we're doing three times the volume that we did a month ago. But there is a chance that I'm going to need hundreds of millions of dollars really quickly because, you know, what if one day our volume 10Xs and, you know, there's these capital requirements and he's like, OK, well, let's work out a deal. Let's have a term sheet in place so that if that does happen and, you know, you need it, we can just like set it up, sign the docs and the money is wired in your account. Same day. Smart. And nobody else was willing to do that kind of that's like an improvised deal. Right. And remember, at the time, venture capitalists weren't really investing. Everyone had kind of battened down the hatches to see what was what was happening with COVID. And a couple of months later, it became clear that some businesses were actually doing well. And, you know, then then the floodgates opened again and it became one of the biggest bull markets ever and kind of a speculative extravaganza from, I'd say, second half 2020 to second half of 2021. One of the things I love about RAMP is their mission is easy to understand. They want to help your business save time and money. And that is why they have built Router. Do me a favor while you're listening to this, go to router.com. Router was built to reduce your company's inference costs by matching every request to the most efficient AI model. Router automatically balances cost, speed and quality of output. Router is built for CTOs and loved by CFOs. 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Applovin ads are full screen videos that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water. And you can launch on Applovin in minutes. You set the goal and Applovin achieves it. No complex setup, no expertise needed. And Applovin scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results scale to hundreds of thousands of dollars of spend per day and increase their revenue by millions. So you want to get started quickly before all of your competitors are on Applovin. And you can do that by going to Applovin.com. That's Applovin.com. March of 2020, we work out this deal and we feel really good. And then we ended up raising capital from Sequoia and then D1. So we never really had to take that term sheet off the shelf because we felt really good and things had kind of stabilized and went to a more normal period of growth. Then January of 2021 happened and it was like a huge inflection point in speculative trading activity. Why? I don't remember. I think part of it was the new year. Every time you cross from like end of December to early January, we kind of see an inflection point in activity, like a step change in activity. I think it's behavioral. People are home. The end of the year is kind of a closing of the chapter, opening the new one, and people start thinking about their finances more. So they open Robinhood accounts and start buying stocks. So there was that. There was also stimulus checks, which dropped in people's accounts. There was lack of other things to do to spend your money. A lot of restaurants and sporting events were closed. So in the zero interest rate environment, yeah, what we saw was just the insane amount of interest in crypto and stocks at the same time. And our crypto business, which we launched in January of 2018, and for a while, it was generating next to nothing in revenue for many years, like close to zero. Because January of 2018 was the start of a prolonged crypto winter. And we had just gotten started, so we didn't have a established base of activity. So people were buying and there were some moments where we had more activity, but call it close to zero until 2020. Then Q3 of 2020, it just went up by 10x. So we started seeing tens of millions of quarterly revenue, Q4 it was hundreds. And by Q2 of 2021, I think we had something like 500, 600 million of crypto revenue. So it went from nothing to our largest or second largest revenue stream. And this was happening alongside all the meme stock stuff. So yeah, we had to contend with both of these things. And remember, by that point, my mind was on the full day trading outage of March of 2020. That was like the last big crisis we had. So I was like, I'm an engineer, keep the systems up, make sure that, you know, we can serve our customers. Because, you know, that was the devil I knew. So yeah, we were just kind of blindsided by the capital requirements issue springing up overnight again. Our capital requirements. Was it really overnight? It was basically overnight. And day of this got kind of confusing because the numbers kept changing. The first number that came through the automated files was something like 3 billion. So it was like 3 billion, then 1.8 billion. Then we had a file that was 700 million. When did you install the 3 billion number? Well, so by the time I woke up, which was 5am Pacific, this was like a very unique moment in my life. First off, at that time, I was sleeping with my phone downstairs because I felt like I was in a bad headspace, just like on my phone the entire time. Like I think COVID at the beginning was very euphoric for me because I was like, oh, I can be so efficient. I can do all this work and then my family is right here and I can just be plugged in while also being present with my family. But a couple of months go by and I realized it's not very good for me. I was just like distracted all the time, always on my phone, always working. So I was trying this thing where I would sleep with my phone in a different room. But specifically, describe your, you said it was a bad headspace. Yeah. Anxious, depression? What is it? Definitely anxious. Probably not depression yet. The best way I can describe it is no matter how good of a meeting I have, if it's on Zoom, I want the meeting to end and I want to kind of go outside, right? It's very different than having a meeting in real life for me where I can kind of vibe with the people. So I realized that about myself during COVID, that I'm not a remote work person. Yeah, it just doesn't make me happy. No matter how good of a meeting I have, how energizing, I just kind of don't want to be staring at people on a computer screen. So you're sleeping downstairs with your phone? Yeah. And so my wife wakes me up because like folks from work call her and she doesn't really get a call from work that often. So she knows it's bad. She's like, oh my God, oh my God, Vlad, you have to call work right away. So I go downstairs and I pick up my phone and my phone is unusable. It's literally like vibrating constantly. Just I pick it up and it's text messages coming in, calls going to voicemail. It's like, I think I saw this on Instagram one time when Kim Kardashian turns off her Do Not Disturb and then you just see that, you know, the phone just starts glitching because people are just commenting on her Instagram posts. Anyway, that's probably the closest I've gotten to that. And yeah, it was kind of like hate tweets and voicemails like, you know, how could you do it? Turn it back on. But what's going on? I thought you had to turn off trading because you didn't have the money to put up. What is exactly? Yeah, so I don't know what's going on yet. And I'm expecting a call from Gretchen, who is our COO. And, you know, I pick up my phone and in between the calls and text messages, I figure out that I can go into settings and block unknown numbers and then Gretchen gets through. And then she's, you know, explaining, explaining things to me. The upshot of it is we had to PCO GME. We had to mark GME, which is GameStop stock position closing only, which since we didn't allow shorting meant people could only sell it. If you you couldn't buy more GME, if you didn't own it, you couldn't buy it. And if you owned it, you could only sell it. She was kind of explaining why it was like, well, first they asked for three billion. Then it was one point eight. We didn't have that much money. Maybe it was a little bit more than that, but definitely not three billion. One point eight would have been tough. And so, OK, what do we do? I don't know. Let's get on a call. We got the leadership team on a on a Zoom call, you know, and everyone was kind of in different places, which made this this type of fire very difficult to fight, because first thing you do now is pull everyone in a room together. Well, there is no room. It was a Zoom call. We kind of decide that we're going to split off into a couple of work streams. One work stream is to figure out how to communicate to customers because they're obviously very very angry at that time. And so, you know, the marketing and comms folks started working on that. Then there was the engineering. Just keep the systems up, which knock on wood, that was actually my biggest fear. Systems were actually like holding up throughout this crazy activity. And then the third work stream is find the money, get the money. We don't know how much we needed, but it was just get as much as possible. So when you know that you need to find the money, who's the first person you call? I called Mickey. That was the first call? Yeah. Yeah. Yeah. And he committed on the spot. He's like, how much? How much do you need? I said, I don't know. 250 million, 500 million. I'm not sure. He's like, I've got it. He didn't have it yet, though. Well, so I learned later in an odd twist of fate that he called up the CEO of SVB. I was going to say it's Silicon Valley Bank. I've heard the story before. Yeah. Yeah. So I had a coffee with, gosh, what was his name? The CEO of SVB. Great guy. He went through his own issue that unfortunately didn't end as positively. But yeah, he was on the golf course in Hawaii and he's like, and Mickey calls him, he's like, I'm going to have to pull down that line of credit that I set up with you guys. So he didn't have the money, but he had a line of credit. And anyway, that ended up being a consequential first call because these times are times of high uncertainty. As you can imagine, nobody wants to give money to a business that's about to collapse. And I think legitimately there were people that were afraid of this. Like when in financial services, if there's a solvency issue, you know, you don't want to be, you have to get your money out first. You certainly, it takes a lot to actually move money in, to inject money at that time. As we found in many failures since then. You know, and I noticed when I tell this story, depending on where we are in the world, people are much more sympathetic to what we went through. Like after the FTX collapse, people were like, okay, I get it. After the SVB banking crises, I think people got it more too. You know, that's funny that you bring up FTX and SVB. I'm thinking like J Gold, I'm thinking of like the stuff that happened way before the invention of the SEC. Like there was, I mean, this was something that throughout, especially American financial history, I've read tons of biographies, like they did this on purpose. They did it for fun. Cornelius Vanderbilt, Daniel Drew, like there's all these people that would essentially like cause bear runs to happen and then would profit. And then obviously there's a lot of financial regulations that came out of this. Totally. And actually, if you look at the history of the specific capital requirements that had exploded for us, a lot of that came up as a result of Dodd-Frank. As a result of the global financial crisis in 2008, they said, okay, we want to make sure everyone is like super capitalized to handle the trading activity that they could handle. So we have these like onerous capital requirements. Of course, they never anticipated that people would be, it would be, you know, retail traders trading in stocks. At home with stimulus checks and everything. Why did you say it's a consequential first call though? I think it could have gone another way where the first call wasn't as strong of a reception. They said, you know, we'll think about it. I've got to talk to my team. I've got to talk to my CFO. And then maybe the second call also said something like that. And then the third call asked me, well, is anyone else doing it? And I have to tell them, no, you're my first call, you know, and time kills all deals. So having Mickey actually answer the phone and commit on the spot got things started for us. Did it give you confidence? Like for me personally? Yeah. What that did for you? It was a really interesting time because juxtapose this like big, we're trying to raise a lot of money. This big like financial need that we had, which typically companies that are in that state are not doing well. It's like kind of a bad situation. But the reason we were in that situation was because we were growing too quickly. It was a consequence of too much success, which is quite rare. So at that time, Robinhood was the number one app in the app store, not just in finance, which is, you know, kind of a still good, but we were ahead of Instagram. We were ahead of tick tock number one overall, extremely rare for finance. We never seen anything like that. So we were in this position where we needed capital, but also we were growing tremendously quickly, which was hard to keep in your head at the same time, because as a leader, obviously, I'm excited about the growth, the success, the revenue. I mean, the January 2028, we hit one point eight billion run rate, something of that nature. Like we had crossed the company, I think, made two hundred million in revenue in twenty twenty nine in twenty nineteen. Then we went to close to a billion and then we ended up doing five X in twelve months. Yeah. OK, four X. Yeah. And then in twenty twenty one, we got to one point eight billion. So obviously, that growth was exciting to me and I was cheering it on. But also along with that rapid growth came just a increase in risk. But go back to the consequential nature of the call and the fact that Mickey just was like, yeah, you got the money. You're done. The fact that he committed on the spot and said, I'm in, made everyone else, every conversation after him much easier. How did those conversations go? So the second call, you say, hey, Mickey Malka is getting me half a billion dollars. Same calls. Mickey Malka's in. OK. I'm into that. And then eventually we started getting the calls. Right. It's like how much is left. And then we were like, wait, wait, wait a minute. These warrants. Yeah. We have to change the deal because we probably had, you know, ten billion dollars of demand at the first term. I love the story you just told, because you're like, yeah, this happened and we're saying what we're January twenty twenty one. What? Yeah. OK. But you're like, it actually didn't happen. It happened March 2020 when you guys did this term sheet, didn't sign and just put in a fucking drawer what you knew was going to happen. That's incredible, dude. Yeah, pretty much. I would bet we would have gotten it done either way. But it certainly helped that we had gone through that exercise of thinking about anything else like that. Another example of just of freshened business planning to that degree. That's I don't want to give myself too much credit. You know, I might give it to Mickey to Mickey. That's incredible. And during that time, a lot of our counterparties because we we have lots of counterparties for running the business to securities lending, for instance, which are big banks and they have credit risk departments. So I had to do a roadshow throughout all this where I talked to all of our banks and I assure them that our financial condition remains strong because, you know, if they pull their lines of credit, it could also create a cascading failure. So, you know, what we pulled off, I've been told, was a miracle, right? There's many ways that the firm could have actually gone bankrupt and and gone insolvent. But I think we just navigated it. Let me close the loop on Mickey, though. I have a question. How does he end his phone calls with you? What does he say? What's the last thing he says to you? I think they just kind of Peter out. I got to ask him why, what he knows about me. But every time that he's the last three times we've hung up the phone, he says, behave. Oh, yeah. He doesn't say bye. He's like, make sure you behave. Or no, he just says, behave. And then the call ends like, what is he going to do? That's not just him saying something in Spanish. No, because I would know it. My dad is Cuban. Yeah. So I'm just like, all right, I got to ask him why. What does he think I'm going to do over here? He never tells me to behave. I know. Exactly. So I was like, all right. Maybe he thinks I'm more well-behaved than you. Apparently. OK, so wait, I want to this is very curious. Like, were you when you were younger, when you were a kid, were you always interested in financial markets? Is this this this interest come later in life? I was always interested in financial markets. How and why? Mickey told a crazy story in my podcast where I think he like borrows money from his grandfather. And his grandfather charged him interest to buy one share of Berkshire Hathaway. And I think he's like 13 years old or something. Yeah. Best with you. I immigrated from Bulgaria to the U.S. in 1992. And the year before I left, 1991, Bulgaria started going through significant inflation. I think the inflation rate in 1991 was like 170%. Very similar to what Mickey experienced in Venezuela. In 1997, a couple years after, we had just escaped or immigrated or what have you. Bulgaria had the unfortunate distinction of the highest inflation rate in the world. Really? 1,700%. Over what time period? One year. Oh. Yeah. So, you know, they were adding zeros to the currency. It went from like two leva to a dollar to 2,000. And, you know, I saw what it did to my grandparents. So it went from kind of being a keen observer to what the communist system, how that affected my family, because my family would always tell this story. On my mom's side, collectivization came in, I want to say the 1960s, really got intense. And so I grew up and we lived in this apartment building. Well, they show me pictures on that territory where there was now this like kind of brutalist, Soviet era kind of hideous apartment building that I grew up in. There was this nice yard and house that my great-grandfather used to own. And they came in and kind of confiscated. And built a big, ugly structure. Built a big, ugly structure, but of course they gave him one of the apartments in there. And then on my dad's side, he always tells the story about how his great-grandfather lost his land. They had like 100 acres or something. And him and his buddies from the village took the long arduous trip to the Capitol to argue in front of the courts that they should have their land back, but they were kind of laughed out and sent back to the village. So anyway, everyone was kind of lamenting the loss of their property. And then hyperinflation came and the financial system collapsed. And I think my grandparents were very lucky because they had just retired. And my parents, who were just beginning to get established in the US, had to support them effectively. So all of our big arguments were about money as a family. Which side was getting more? How old were you when this is happening? I was five when I moved. And by the financial currency crisis, I was probably 10, 1997. I was born in 87. And then also my grandfather, one of my earliest memories was opening up this closet in their apartment. And it was just copper cookware falling out. That was their investments. That was their store of wealth. They would hoard copper cookware. Because the inflation was so bad. The inflation was gruesome. And I also remember the Cuban bananas were very delicious. When I came to America, one of the things that shocked me was you go into the grocery store, there's bananas everywhere. Of course, I couldn't touch the organic ones. My mom would slap my hand if I got near those. But in Bulgaria, Cuban bananas were like a once a year thing where my grandfather would kind of have his hookup over at the shipyards. So it was very, very different. I spent the last decade reading more than 400 biographies of history's greatest founders. And if I had to distill what I learned down to a single word, it would be focus. The best founders spend all their time on the thing that makes them great. 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And you're hearing these crazy stories from obviously your parents and your grandparents. Do your grandparents make it to America as well? No, no, they don't. Okay, so they stay there the whole time? They stay in Bulgaria, yeah. Okay. Yeah, the first time my grandparents came to America, this crazy story, was on September 11th, 2001. They're scheduled to have their first trip to the US to visit us for the first time. September 11th, 2001, they depart Bulgaria on the way to the US. Of course, their plane gets- They close the airspace? The plane gets immediately rerouted to Frankfurt, Germany, and they spend two weeks in the basement of the Frankfurt airport. Oh, wow. Yeah, just they had like rows of beds pending the next flight. Okay, so you're, let's say, 10 years old. When do you start paying attention to financial markets, money, when do you get an interest in this? When we land in America, there was just this huge sea change immediately. Like the vibe was completely different. And I noticed it as a five-year-old. Because in Bulgaria, you walk around, the society's collapsing, all the old ladies are like looking down, and everyone's moving kind of slowly. My first arrival in America, still remember it, I landed in JFK. And my parents lived in Delaware, because my dad was a grad student at the University of Delaware. So on the drive from JFK airport to Delaware, we drove through Manhattan. And to a Bulgarian kid who just got on the plane ride- It's gotta be like another planet. Manhattan just seemed like science fiction. I was like, is the whole country like this? Like the buildings are so cute. Every single building would be the tallest building in Bulgaria. It's like the buildings are competing with each other. There was no competition in Bulgaria. People weren't competitive. People were just moving quickly. I was like, why is everyone in a hurry? And so, I think the other thing that happened was I was the only child, and my parents were kind of just getting started. And they were always figuring out how to move ahead in their careers. And I kind of felt like equal partner in that, almost. My parents would sit me down. They'd say, look, Vladimir, our status as visa holders in this country is very fragile. We get deported at any moment. By the way, your dad isn't making any money, so you're gonna have to get a scholarship if you wanna get to college. Can't count on us, basically. And so from pretty early on, I was like, oh, okay. Money's pretty tight here. I was just thinking about all that stuff. You're an only child. They never had another kid after you? No. But they're talking to you. Because of our financial situation. Which is devastating. I'm sure probably their biggest regret, are your parents still alive? Yeah. God bless that they've seen your success. That's gotta be awesome for them. I bet you if you talk to them, their biggest regret is probably not being able to have more children, I would guess. Yeah. But they're talking to you like an adult, which I think is very smart. And not like hiding things, saying, hey, we're in a dire situation. Like, if you obviously want a better life, you're in this country. You see the difference between Bulgaria and America. This basically lights a fuel inside of you. Yeah. And I was a latchkey child, too. My parents couldn't afford a babysitter. Yeah, we were around the same age. The idea, we just ran the streets whenever you wanted to. Ran the streets. I would walk home from the bus stop, a mile to the apartment building. At first, they were like, knock on the neighbor's door, who was this Indonesian family, and she'll let you in, she'll give you the key. Then they realized, well, our son's going through this kind of complicated chain of events to get home. Why don't we just, we can trust him with the key, so. And so then you find computers, and you get interested in computers. How old were you then? I was probably five or six. Really? So what happened was, in lieu of a babysitter, my dad would sometimes take me to grad school with him. He was a grad student at the University of Maryland. What was he studying? Economics. Okay. So I would hang out in the computer lab, and he would be going to class, or whatever. So my first experience with computers was just hanging out there, right? But you had free reign to do whatever you want while you were in school? Free reign, totally. Yeah, and he didn't know how to use computers. I didn't know either. He's like, play around, figure it out for yourself. And I kind of got into it pretty quickly. Of course, I started gaming, you know, figure out. Figure out how to install games, because there were other grad students there, and they showed me, and be like, hey, can I take the floppy disk? And then somehow, we didn't have any money, but they decided it would be a good idea to buy a computer ourselves. So we got a computer maybe when I was seven years old. I got really into this thing. Didn't have internet, of course. So I was like, you know, learning to use the terminal, doing all of that. I was a pretty good student. Another thing that my parents, I think, at the time, I was kind of annoyed at them for this, because all of my friends were always in activities, right? They were doing baseball, or T-ball, or basketball, or soccer. My parents were basically like, first off, we can't afford any of this stuff. Second of all, I don't know who's gonna drive you. You know, we have one car, and we're both working. So you have to figure that out for yourself. You know, you wanna call your friends, get a carpool. I was like six years old. So it just never happened. And so I was just kind of at home a lot on the computer. And when we ended up getting internet eventually, I opened up Yahoo Finance and created a portfolio. Why? I don't even know how I got into it, but I did, and I just, yeah, got into it. And so was stocks your first fascination? Yeah, stocks, computers, and computer games. And at this point, were you already, you already had an interest in math, or no? Yeah, I think pretty early on, I realized that I was good at math. You know, and this was kind of interesting for me too, because I was dropped into school in America, kindergarten, not knowing a word of English. So my first experience was kind of disheartening in a way. It's like, you're going into this place, don't even speak the language. I can't even tell the teacher that I want that toy, right? So a couple months ago, I was reading my old report cards. I found my report cards from when I was in kindergarten. And, you know, the teachers were writing about me. And I read this one that was like, you know, Vladimir, he's adjusting well to kindergarten. He's not talking to the other children yet. It kind of made me sad. So I'm like, man, I wasn't talking to the, this was six months in, probably because I didn't know English and I was just shy and quiet. By, I guess, the end of first grade, I was in advanced English and advanced math. So this was back when they would kind of still sort kids. You would have talented and gifted. Yeah. So by the end of, yeah, I guess in one year, I had gone from not knowing anything, not talking to anyone, to kind of being in the most advanced math and English. And, you know, the teachers were like, okay, well, maybe he should skip a grade. So I got to feel that trajectory. And I think at that point I realized, okay, I'm probably, I guess I'm good at math and school and learning. But if you go back to like, you're a kid sitting alone in an apartment on your computer, building a portfolio on Yahoo Finance, was it just because you're like, hey, I'm sick of fucking being poor? I don't want to reenact what I saw in Bulgaria. And I'm in, like, do you think you even understood why you were interested in finance? Did you see it as a path to like become wealthy one day and essentially have more control? Because what you're describing right now, it's like you essentially your family. I mean, a lot of families that, you know, when you go back to Mickey Malco's family, having to come from Venezuela, I think he was like in his thirties. My father, I was born in Cuba, came here. Like you have a lack of autonomy, lack of control. And some people would just like, they just break under that pressure. And other people, which is the read I'm getting on you, is just like, I need to find a way out and a path out where I actually have control and actually can build wealth and have control of a future and build a future vastly different than the ones that your grandparents experienced, for example. Yeah, I think at that point, I was terrified of the downside case, which was, shoot, what if, you know, we're homeless or I'm homeless, or I can't just figure out all this stuff. Like I thought that the prospect of getting a job that paid me a lot of money, because I didn't know anything about entrepreneurship at that point. It was just not even in my vocabulary. Because you don't have any entrepreneurs in your family, right? Yeah, well, actually my dad had an entrepreneurial venture in Bulgaria, which I was too small to kind of realize it at that time. But he started a tourism business. There's a lot of tourism when the society's collapsing? Well, as soon as the Berlin Wall fell, there was this influx of tourists that came. They couldn't come from Western Europe before. And my dad spoke French. So they started this business called Contour, kind of a cool name, where they would basically take the French tourists around the Bulgarian sites, which there were lots of amazing historical sites. Tourism is still the largest industry in Bulgaria. I think it was probably. was still doing well during the collapse because it relied on foreign money in. Yeah, small scale and not a technology business. They would like buy buses and take people around. But did you think you were gonna get, when you said, okay, I didn't even think, you didn't even know, really no entrepreneurship was a path that was available to me at that time. Did you think you were gonna get a job in finance? Like what did you think, if you could go back and talk to that version of Vlad, what did he think he was gonna do? I think my mom's ideal picture of what I would end up doing would be getting a job as like a analyst at JP Morgan or something, or God forbid, Goldman Sachs. That would have just blown my mom's mind. Or consulting McKinsey. Yeah, because both of my parents started working at the World Bank. My dad actually began working at the World Bank while he was a full-time grad student at University of Maryland. So he had two full-time jobs. He was a full-time grad student, full-time at the World Bank. And he paid for, we got enough money for my mom to get an MBA at Georgetown to also join the World Bank. And they were there for their entire professional careers. So 25 years each. Yeah, it's kind of interesting. My parents took this like one massive risk of just uprooting the entire family, moving to this new country. I think when they got here, they were just very focused on stability. It was almost like, we're done. Like that was just such a crazy experience that let's just make sure now that we're here, we can stay here and we can provide a good foundation for our son. Yeah, I think for me, the interest in investing at first was curiosity. Like I had heard about investing. I was on all the message boards. I saw people talking about it. We were in the midst of the dot-com boom. So it was just there. Of course, I saw reports that some people were making a lot of money. That was attractive, but. Yeah, but at that time you were probably what, 13? In 2000, something like that? You were born in 87? Exactly. I was learning, right? Yeah, I had a simulated portfolio that did quite well during that time period. Probably because everything was doing well. But then my dad gave me a challenge. He was like, I was studying for this test because I was in this program called CTY. I don't know if you're familiar with it. Basically, you take the SAT. Depending on how you do, they put you into this program where you get to do a year's worth of math in two weeks. I was doing this thing and I think I was in seventh grade at the time and I had skipped a grade. So I was 12 years old and he said, all right, if you get above 1300 on the SAT, I will give you your score in dollars to invest with. And this was very motivating to me. I think he did a very smart thing because I just got after it. And I ended up getting a 1370 on the SAT. So he gave me some money to invest with. So then that became my real portfolio. So now you don't have a simulated portfolio. Now I don't have a simulated portfolio. Now I deploy real capital. And of course, a couple of months later, the market crashed, but not before I made a smart move. So I bought this company 3Com, which made the Palm Pilot, which was like the first PDA, personal digital assistant. And so I put a lot of money in 3Com and it spun off Palm. So I went from having one stock to having two stocks. And then I remember getting the big packet of shareholder information in the mail and leafing through it. And it gave me this feeling like I actually own something, right? And there was just, even though it wasn't a ton of money, there was like some pride in that. Like, not only did I buy this thing, but I'm an owner of this company. They want me to vote. They care. I got to learn what a corporate reorganization and spinoff is, tracking this portfolio. I learned a lot. Excellent real life education for a kid, all from this idea that your dad had. I got super passionate about it. Yeah, and you know, I started trading quite a bit. I had a Nvidia pretty early. And you might regret it. All the way through, right? No. Sold at 25. Cause they made great graphics cards. Yeah. I loved. And you're a gamer. I love gaming. Deal is how the best founders turn the world into their talent pool. 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With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deal.com forward slash senra. That is deal.com forward slash senra. So let me ask you a question. I've heard you say before that you find entrepreneurship intoxicating. Yeah. Now I can't get a read on you whether you're more into finance because you've built a business that facilitates people to trade or you're more into entrepreneurship. Which one is more dominant in your brain? Entrepreneurship or investing? I think that's an interesting question. Those are the only kinds I have. Yeah, it's always hard to figure out the contrapositive of what would have happened if Beiju, who's my Robinhood co-founder, hadn't called me and convinced me to start our first company together. There were a lot of competing forces. So before I became an entrepreneur, I was a math grad student. And I think my relationship with math was a long and somewhat tortured one. So from when I was in kindergarten, it became really clear that I was good at math. I was like the top math student in my class. And I started getting all this positive reinforcement. Well, do more math. Do it in the summer. Do a year's worth of math in two weeks. And it kind of became this self-referential loop where I would just try to climb the ladder, right? All the way through to becoming a math PhD student at UCLA, studying under this guy, Terence Tao, which many consider to be the greatest living mathematician. So kind of pretty high in the hierarchy. I mean, I wasn't a postdoc or a professor, but I was definitely probably in the top 0.001% of how much math a person realistically would try to learn. So I was in math grad school. My first month in grad school, you have the start of the global financial crisis. And even though I had been at Stanford, I wasn't really in the entrepreneurial circles. And also back then, Stanford was not quite as entrepreneurially focused as it is today. Like the number one major wasn't computer science. A lot of people wanted to go into finance, but like Goldman, JP Morgan, I wasn't really in those circles. I was more in the math and physics kind of research circles. And my math and physics friends weren't very employable. This was like pre-data science, pre-AI. Everyone was hiring computer science people. So I was also in a weird position of not having a ton of attractive work options. Like I didn't get a ton of job interviews. I kind of went to UCLA because of the best option, the default option, continue doing math. I was getting paid $18,000 to be a grad student, get to hang out in LA, which we both know is very nice. Although not a very nice place if you're super poor, to be clear. I was kind of drifting at that time. And then I get into grad school and I see all of these immigrants. And there were people who I imagine kind of like my dad had fled their countries and this was kind of their moment. So they were doing math all the time. They wouldn't go out. They would just be sleeping, eating, going to class, doing math. And then I remember thinking to myself, man, if I'm not like that, what am I even doing? Like there's no way I'm gonna out-compete these people for that ever winnowing number of postdoc positions. And I kind of asked a lot of questions of myself, like, do I even want that? Is that the life that I want? Well, Terence Tao, the greatest mathematician in the world, maybe there's like 20 people in the world that can understand a Terence Tao paper. So it wasn't like what you learn in class, Gauss, Riemann, all these great mathematicians that every child learns their work. It had gotten so specialized that very few people read this stuff now. So at that point, I started asking myself, is this like ladder of math leading me to a good place? And I realized, no. The romantic idea of like learning for learning's sake and progressing and making discoveries kind of collided with the practical reality of this being just like one of the worst careers and jobs. And I'm not even talking about dealing with like the administration of the university and all that bureaucracy. So I wasn't very happy with what I was doing. And at that time, Lehman Brothers went under and you had the start of the global financial crisis. And my co-founder, Beiju, who was also a math and physics guy, so we bonded over that. He got a job at a hedge fund up in Marin County, kind of on a whim. And he calls me up and convinces me to start a company with him. And what is that company gonna do? Basically, he was hired in this hedge fund that was doing proprietary trading. So it wasn't really a hedge fund. It was a proprietary trading firm. They were trading the owner's capital and deploying it with computerized algorithmic trading strategies. Essentially, they had a couple of trades that were making money. One of them was what's called interlisted ARB. And this is the simplest strategy ever. Basically, the way it works is you have a stock that's trading in Canada, Intel, say, and then it's also trading in New York and you have a fast line in between them. So you just buy it where it's cheaper and sell it where it's more expensive. And you try to minimize the latency between the two so that you have less slippage. Well, this company had a pretty fast line between Toronto and New York. So they were able to make a lot of money using this trade. And then there were a couple of other ones. There was this market-on-close trade, which literally just traded. It would buy the imbalance heading into the close. So it would trade five minutes at the end of the day. And it's, again, just a total speed game. So he calls me up. He says, look, I was hired here to be the first quant. I get to see all the traders. I get to see all the engineers. They're running on Windows machines. They've got Java. A trade hops through like 30 machines before it gets sent to the exchange. So the original idea that we got started with is can we just compress that? Can we make it one machine? Can we run Linux? Can we have it on C rather than Java? And maybe we take that 30-millisecond latency down to 10 milliseconds. And if it's a speed game, that should win. But wait a minute, before we get there, idea aside, think about the jump from, I would say, conservative family upbringing in the sense your parents took a huge risk by coming to America. But once they got here, they're like, we're essentially gonna stick to one career. Almost, I don't know if the counselor is like, just get a normal job. You just said your mom's goal would be like, just go work at Goldman Sachs or JP Morgan. It's awesome. Just middle class life, maybe upper middle class. Maybe you save a lot of money. You're a single digit millionaire in a few years, whatever the case is. But you're going from, that's a hell of a jump from math grad student to entrepreneur when you've never run a company before. And you did it. So explain how you made the decision. And it was a hard decision, to be clear. I wrestled with it a little bit. I was like, do I really want to do this? Well, I was in a fortunate position. I passed my quals my first year. So then the summer after your freshman year, or your first year, typically you're kind of studying for your quals. So the math department kind of paid you to study for your quals, get ready for the exams and whatnot, but I passed them the end of my first year. So essentially I was being paid to do nothing. And so that was an opportunity to get together and hack on stuff, right? And we rented a little place in the South Mission, me, Beju, and this other kid, Andrew Yarmola, who was also from the Stanford math department with us. And we got this place in the South Mission, not a great neighborhood, but kind of fun. And we were just like building the trading system. That was kind of the goal for the summer. And then my plan was always to kind of take stock of where things were at the end of the summer, see how much progress we made. And essentially we'd made very little progress, but we were having a lot of fun and I kind of wanted to see it through. So the idea was we were gonna build this stuff, then we were gonna go to New York and kind of figure out how to deploy it and trade it. You just said, I wasn't happy with what I was doing, and now you're having fun, not making much money. Zero money. Yeah, so it's like grad student stipend. But that's good enough. So it didn't seem like- The fact that I was having more fun is a good enough reason. It didn't seem like I was taking a huge risk, to be honest with you, because the alternative, it's not like I was like killing it, making a killing, working at a cushy job at Google that was paying me millions of dollars a year. You were making 18,000 a year. I was making 18,000 a year. Turns out if this doesn't work, I can probably find another job that'll make 18,000 dollars a year. Well, and I was concerned about that actually. So I went to the vice chair of the department to ask for a leave of absence. And I was like, all right, I do want a safety net. I'm not gonna be stupid here. I'm gonna go to the vice chair and request a leave of absence for a year. And I was like biting my fingernails off for this conversation. And I still remember it vividly because I planned out my decision tree. And I was like, if he tells me he won't approve it, I'll probably stay back and keep doing grad school. And it was this Russian guy, Dimash Lutenko. And actually a couple of years ago, I was invited to give the commencement at UCLA math. And Dimash Lutenko was the department chair at that time. So we had this dinner and I was like, do you remember that conversation? It changed the trajectory of my life. Changed the trajectory of my life. And he's like, that conversation changed, it was very memorable. I'm very proud of you. And so I go into his office and he's like, so you want to be a businessman, huh? When I was your age, I also wanted business. I wish you good luck. You do it and we will have spot for you if it doesn't work out. Oh, that's awesome. So I was like, man, this guy just, yeah, just gave me a, yeah, safety net. So I felt good. Have you read any of the biographies on Elon? Some of them, yeah. Yeah, he has a story that he tells in one of them. I think all of the ones I've read about him, where I think he was in grad school. I forgot what, he was in some kind of school and he said, I'm going to take a leave of absence. And the guy said to him, you're never going to be back. And he goes, turns out he was right. And I think he left to go do zip two, if I remember correctly. I took a leave of absence. We put all of our servers and all of our stuff in the back of my 1998 Infiniti Q45 boat of a car, drive across the country from LA to New York City. For the first year, we were kind of derping around, honestly, try some things, they didn't really work out. And then the year came. And then I remember having this conversation with my mom. I was living in Brooklyn at the time in this like terrible apartment that we were subletting. The bathroom was in the kitchen sort of thing. Very sanitary. Yeah, yeah. And my mom would visit me and she cried. She's like, man, my son. The math genius. My son went to Stanford. First of all, he went to Stanford. And then with great shame, I had to tell people he then went to UCLA. Because Stanford, everyone knows. And you have to explain the nuance of actually UCLA having a very, very strong pure maths department to people. But at a surface level, it kind of felt like a downgrade, at least to my parents. And now he's borderline homeless, living in Bushwick in this apartment that the bathroom's in the kitchen. They're like, are you gonna go back to UCLA? They knew about my one year. I am like, no. I'm having way too much fun. This is awesome. Who cares that we're not successful? Say more about that. Who cares that we're not successful? Is this when you said you found entrepreneurship intoxicating even before you had success? Yeah, so I think the first experience that I had with entrepreneurship was almost the best parts of doing math, but without any of the bullshit. So the best parts of doing math are that it's just you, your mind, maybe a chalkboard. Now it's a computer, but back then, it was just you, your mind, a couch, and you could just make progress, and you actually didn't have to depend on any other people. And of course, when you turn math into a career, it stops being that because you have to go to classes, you have to teach, TA, deal with the department administration, all that shit. But yeah, this was kind of similar in a way. It's just you, computer, you're writing code. Maybe you have a business. That business generates revenue. People want the code you write, but it's all under your control, and no boss. No one that you have to deal with. So that was the first time I'd kind of experienced that, and I found that part intoxicating. And now eventually, I think it became important for us to earn a living. So entrepreneurship for entrepreneurship's sake lasted. That carried me on so far. And then it became about, can we actually create a business that generates revenue that we could support ourselves? And we weren't quite there at the time I had to make the decision, but I did feel optimistic that we were gonna get there. And so six months later, we had a business generating revenue. And it wasn't the original business we thought of. We weren't trading, but we were selling low-latency trading software to other companies. So we had kind of improvised our way to a business. Yeah, it got to maybe 2 million in revenue. We hired a small team. We were profitable, growing. We had a path to 10 million or so in revenue. And then I kind of went into my second evolution as an entrepreneur. The first one was from just enjoying entrepreneurship for entrepreneurship's sake to having a sustainable business that could feed me and my co-founder and our employees. Then the second gate was, well, I could grow this business from 1 million to 10 million, maybe get to 100 million. But if I had to look back on my life in 50 years, would I be proud of what I was doing? Would I feel like I contributed positively to the world and to society and made an impact? And we were selling software to hedge funds who were already rich and making them trade a little bit faster and more efficiently. My co-founder and I both kind of realized that if anything, this was a means to an end. We didn't see ourselves just really doing this business for the long term. I love the idea that you imagine yourself as an older person looking back on your life. Yeah. I think I've heard you say this is like a legacy test. It's like, do I really wanna spend the next 30 to 40 years of my life doing this? You'd get to the end and be like, I kind of wasted my life. It reminds me of that famous conversation that Steve Jobs had when he was recruiting John Sculley from Pepsi. He's like, you wanna continue to sell sugar water or you wanna come with me and change the world? Like, it's very fascinating. But I think this idea that I love, and maybe I'm wrong, but looking at the career choice that you're making, the business that you can build because you're an entrepreneur, you can build whatever business you want. Looking at it, it's like, will I spend the next 30 to 40 years of my life doing this? And if the answer is no, you should stop. I think another reason why I liked mathematics as a thing to do was this idea of making a fundamental discovery. And maybe if you make a fundamental discovery that's really big, eventually every child will learn about it, right? It'll be in the, not just in the history books, but every child will learn about the techniques in school. That got me really excited because you have both the act of creation of bringing something new into the world, which I find just inherently interesting, but also that there's an impact and it could affect millions of people. And I think that's what got me really excited about the idea that became Robinhood. It's both like a act of creation, something new, fundamentally different, and something that could have mass scale, that could change the lives of hundreds of millions of people. So it goes back to where this tree of our discussion started where you think much more of yourself as an entrepreneur, you get a lot more satisfaction out of the success you have as an entrepreneur compared to the success you had as an investor. As an investor, or you mean a founder of a financial company? No, I mean, you invest as well, but clearly from the discussion we've had, and especially where you just wrapped it up beautifully, it's like you think of yourself much more as an entrepreneur. You ever read Michael Bloomberg's autobiography? I haven't, no. Okay, so he was in finance, and when he got fired, I think, from Salomon Brothers, I think it was in like 1980, something like that, he had like a $15 million golden parachute, which is a ton of money at the time. And everybody, since he was in finance, they thought, okay, you're just gonna take that money and live as an investor, and he's just like, no, I wanna build something. I wanna build a business that actually makes other people's lives better. And he talks about it over and over again in his autobiography. It's exactly the story you just told us. Yeah, I mean, I think the financial aspect is really integrated into my upbringing and identity as well, which is a reason why I care about it, and I care about our customers. Things are changing very rapidly in this world. I mean, you have AI, and it's really changing things for the positive, also making people very nervous. But one thing that's not changing, I'm pretty confident, is the importance of having money, investing, generating passive income. I think that's never been more important than it is right now. Vlad, you took this discussion in areas I had no possible indication that we were gonna go. I didn't even get to half the stuff I wanna talk to you about, so I'm gonna come back in a few months, and then we're actually gonna do the How Vlad Works episode, but this was awesome, dude. Thanks for the time. Let's do it. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening, and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.