Ten years ago, Robinhood was founded to “democratize” stock trading, or more simply, to make it more accessible for anyone to trade stocks.
Over time, the now publicly traded company has broadened its offerings – allowing users to do far more than just buy shares of stocks. Today, its goal is simple: To democratize finance for all, according to CEO and co-founder Vlad Tenev – who was on the Fintech Stage at TechCrunch Disrupt.
“We started with trading and investing. But more recently, we've been helping customers with their comprehensive set of financial needs. So we see a world where we can not only help you trade [stocks or crypto], but we can help you save for retirement. And we can help you build up an emergency fund. And we can help you sort of manage your money holistically regardless of what stage you are, and really help you achieve your financial goals and I think that that's been really resonating with customers,” Tenev said.
Acknowledging that a few years ago, people might not have taken Robinhood seriously as a place to save for retirement, Tenev believes the narrative around his company has changed.
Last December, the Menlo Park, California-based fintech launched a waitlist for its new offering, Robinhood Retirement, which it described as the “first and only” individual retirement account (IRA) with a 1% match on every eligible dollar contributed. For Gold members, the match increased to 3%. Some have argued that the move was in part a way to slow user attrition. But Tenev remains bullish.
“The same tools and economic benefit of no commissions that make it a no-brainer to be a trader also make it a no-brainer to build a portfolio, and become a passive-long term investor,” he said. “We rolled out retirement, and now we're seeing Robinhood being mentioned and discussed in all sorts of other forums. At one time, Robinhood was probably considered more of a toy product, but now people are saying, ‘We just can’t ignore this anymore.’ ”
Last quarter, Robinhood achieved GAAP profitability for the first time, helped by higher interest rates.
The road to get to this point was not without its bumps.
The company made headlines in early 2021 when it was blindsided by the surge in interest from the first big “meme stock” after Redditors and other retail investors rallied around Gamestop and sent its price into the stratosphere. As reported by TC, Robinhood famously froze trades around GameStop and some adjacent hot stocks as the company teetered on the edge of what its platform — and its pocketbook — could handle. When it comes to the Gamestop debacle specifically -- which threatened to implode the company -- Tenev is also confident that if the same situation were to occur, Robinhood would be “across the board much better equipped to handle it.”
Advances in products and geography
Generally, in 2020 and 2021, Robinhood’s product roadmap “took a backseat,” according to Tenev.
“I think the most important thing was just making sure that we were stable, that we were scaling and that we could actually handle the demands on the business,” he recalls. “I think we’ve made a lot of progress. The customer support, the infrastructure, and the reliability of it has improved dramatically.”
Added Tenev: “And as we got out of that into the new regime of high interest rates, we've been able to focus again on accelerating the product roadmap.” For example, it acquired startup X1 earlier this year and has plans to launch its own credit card. The company is also forging ahead on its international ambitions.
Robinhood is planning to launch in the United Kingdom in the next few months – a move that had been actually planned for 2020.
“In addition to rolling out all sorts of products to help customers manage their money here, we can expand overseas and as a technology company, I think we have certain advantages that our competitors can't match,” Tenev said. “We don't need a ton of brick and mortar. We rely on automation to provide a lot of the services that we offer. And so we can take the infrastructure that we're building and now expand to the UK, and to Europe and Asia and really to make it so that anyone with a smartphone can access Robinhood.”
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