Inside the Mind of Robinhood Co-Founder Vlad Tenev

Shane Parrish: I want to come to GameStop for a moment. So take me back to the moment your phone rings. You need billions in collateral, maybe set the scene for us and you make a decision to restrict the trading. How did you make that decision? 

Vlad Tenev: I have very fuzzy recollection of that time. I’ve heard a lot from people that have many children, including myself. I have more than one. My wife says, “The pregnancy and the childbirth very, very painful, but for some reason I don’t remember it.” And then that evolutionarily gives you the signal that you should do it again. And I think we’re doing … Yeah. I think I was at this IPO Roundtable at the SEC about making the IPOs great again and with Robinhood Ventures, we’re taking that fund public. So we’re doing another IPO, and I joked that it’s kind of like that, the IPO process, I remember being painful and I didn’t like it, but I don’t really exactly remember why, and now I kind of want to do it again. But yeah, that’s a big aside that has nothing to do with GameStop other than… Yeah. That was a very challenging time. It was towards the end of COVID and I felt like everyone was going a little bit crazy. They’d been cooped up at home for about a year without much human to human interaction. I think from a crisis management standpoint, it was very difficult to deal with because we’re doing these conference video calls with all these different stakeholders. The regulators weren’t in office. And so yeah, basically what happened was we got this automated file in the middle of the night and it had big numbers on it. It had big numbers that kept changing, and it was a situation which had no precedent. And we had to make a tough call to put GameStop in a bunch of other companies on position closing only, which basically meant you couldn’t open up new positions, take on more risk for a period of about one day. So it wasn’t even that long. But because there was this narrative that had taken over social media, this viral narrative that it was the retail investors taking down the hedge funds, and we were kind of the tool. People wanted to put, it was like a good versus evil thing. And I think what would’ve at any other time for any other stock been kind of an innocuous risk management decision to control our internal risk turned into Robinhood’s on the side of the hedge funds colluding against the retail investor. And I think the fact that the name of the company was Robinhood made this a juicy, false narrative that continued to go viral. So I remember the beginning in the middle of the night when I woke up, my phone was basically unusable because it was like those videos you see of what happens if a Kardashian turns off do not disturb on their phone. It just is a constant buzzing thing. So that was my morning. I was like, the phone is completely unusable. I can’t even get on a Zoom call because there’s just random people calling me, telling me to turn it back on.