AP Interview: Robinhood's CEO eyes expansion beyond trading

3 years ago 365

NEW YORK – Robinhood has already changed however radical commercialized stocks and who's doing it. Now its sights are connected the remainder of the fiscal industry.

Shares of Robinhood Markets are acceptable to statesman trading connected the Nasdaq Thursday, a highly anticipated archetypal offering by the institution that's drawn a caller procreation of investors into the marketplace and forced the manufacture to halt charging fees for trading. But portion the IPO is simply a milestone, it's not a culmination, according to CEO Vlad Tenev.

In an interrogation with The Associated Press, Tenev said helium wants Robinhood to beryllium the lone app that radical usage connected their phones for money. That covers everything from depositing paychecks to paying bills to splitting payments with friends.

Tenev, who founded Robinhood with chap Stanford postgraduate Baiju Bhatt successful 2013, besides said helium accepts however his institution has go synonymous with the roar successful trading by smaller-pocketed and novice investors, for some bully and ill. Such investors are getting their archetypal accidental to turn their wealth, aft years of falling further down stock-owning households, but they besides person been criticized for making excessively galore risky trades with their newfound app.

Early this year, they astir singlehandedly sent GameStop and a radical of different “meme stocks” to heights nonrecreational investors called dangerously irrational. The mania led to large losses for immoderate hedge funds, aggregate halts successful trading for stocks and legislature hearings asking who was getting hurt. It besides forced Robinhood to temporarily barroom its customers from making immoderate GameStop trades, aft it abruptly had to station overmuch much successful collateral to its clearinghouses that process its trades.

Critics accidental the institution based successful Menlo Park, California, encourages unsophisticated investors to marque unsafe bets by making it look excessively overmuch similar a game. But Tenev said helium wants his app to promote everyone to nett from the banal market, not conscionable the elite. This interrogation has been edited for clarity and for length.

Q: This twelvemonth started disconnected rocky for Robinhood with the GameStop saga. Is the IPO a motion the institution has turned the corner?

A: I deliberation it’s an astonishing milestone, and it’s truly a solemnisation of the idiosyncratic investor. Individual investors person undoubtedly seen a resurgence implicit the past fewer years, and Robinhood has been portion of that story. We deliberation there’s a batch much we tin inactive bash to service the idiosyncratic investor.

Q: Your app makes it amusive and casual to trade, but that’s thing you get disapproval for, some connected Wall Street and from regulators. Is that disapproval justified?

A: I don’t deliberation so. We judge that there’s ever things that we could beryllium doing better, and we’re investing a batch successful making definite that customers are educated. Ultimately, though, much entree is better. And the banal marketplace successful peculiar has been a large root of wealthiness instauration for truthful galore people. It’s been reserved for the 1% for a precise agelong time. So we’re arrogant to springiness entree and to marque it easier for radical to use.

Q: Why is Robinhood the lightning rod for truthful overmuch criticism?

A: Well, I deliberation that Robinhood has go synonymous with retail investing and the idiosyncratic capitalist successful America, and with that comes bully things and the downsides of it arsenic well. You perceive “Robinhood investors,” and that’s benignant of go the caller word for retail investors. So I deliberation it’s a affirmative thing, that helps get the marque retired there. But whenever there’s disapproval for the industry, since we correspond it, we to immoderate grade person to reply to it.

Q: When you look astatine your customers, bash you deliberation they spot it arsenic amusement astatine all?

A: Well, I deliberation that successful general, it’s important for our customers to bask utilizing our products. I deliberation if there’s nary enjoyment to it, if there’s nary joyousness successful your investing, you’re conscionable going to bash little of it. So we privation to marque our products casual to use, but it’s besides important for radical to beryllium educated, to beryllium informed. And that’s wherefore we’ve been investing truthful overmuch and making definite our products are harmless and we supply each of the acquisition tools that our customers request to succeed.

Q: When GameStop was shaking Wall Street, radical were saying it was the “Robinhood gang” taking implicit the market. Does the usage of that word fuss you?

A: If it’s being discussed oregon utilized pejoratively, certainly, due to the fact that it’s specified a wide brush. What you’re seeing is simply a batch of these customers gathering portfolios, and they’re mostly buying and accumulating stocks. So I deliberation a batch of radical are engaging successful semipermanent beneficial behaviors. So it is simply a small spot unfair that a ample radical of radical is benignant of painted with the brushwood of a comparatively tiny radical of people.

Q: What bash you deliberation personally erstwhile radical accidental Robinhood makes the banal marketplace a casino, oregon much of a casino than it would beryllium otherwise?

A: I deliberation it’s a big, large mischaracterization due to the fact that if you look astatine it, the banal marketplace has been 1 of the top wealthiness instauration tools. We should beryllium encouraging entree to it and not denigrating radical that are capable to usage it. So successful a sense, you’re proceeding erstwhile wealthier customers are engaging successful the banal market, it’s investing. But erstwhile the remainder of america are accessing the banal market, it’s gambling. And I deliberation that rhetoric conscionable has to go.

Q: One retired of each $20 Robinhood made astatine the commencement of the twelvemonth came conscionable from dogecoin. How important are Bitcoin and different cryptocurrencies to the semipermanent strategy?

A: It’s surely an country we’re funny in. I mean, it’s successful galore ways the aboriginal of the fiscal industry, according to a batch of people. So we privation to marque definite that we’re there, and we’re serving customers good arsenic they’re funny successful exploring this caller plus class. So, nary doubt, crypto has been precise culturally applicable done the archetypal six months of the year.

Q; What volition Robinhood look similar successful the future?

A: Over time, we privation to beryllium the azygous wealth app, the astir trusted and astir culturally applicable wealth app worldwide. So, everything that you usage your wealth for, you should beryllium capable to bash done Robinhood.

Anytime you person a paycheck nonstop deposit, we’d similar you to bash that done Robinhood. Your exigency fund, your measure pay, your day-to-day spending, we’d similar for customers to usage america for that. And of course, each types of investing ranging from much discretionary investing to semipermanent status savings arsenic well.

Q: After the IPO, you whitethorn beryllium worthy much than $2 billion. Are determination immoderate societal causes that you’re reasoning of championing?

A: I haven’t started reasoning excessively overmuch astir what I’m going to bash post-IPO, I’ve been precise overmuch focused connected the institution and the mission. But we’ll see. I mean, I deliberation Robinhood’s ngo itself is simply a origin that I judge successful precise strongly. Financial empowerment and inclusion for each is thing we judge successful precise strongly.

Q: So you’re not going to bargain a summons to space? I heard your favourite satellite was Venus.

A: Not a precise hospitable satellite to visit, it turns out. I similar each the planets. Earth is beauteous good, too, truthful I’m blessed staying present for the clip being.

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