Dialogue with Robinhood Founder: Retail Investors' Will Surpasses All "Smart Money"

Source: Master Investor

Compiled by Odaily (@OdailyChina); Translated by Azuma (@azuma_eth)

Editor's Note: Robinhood recently launched Robinhood Chain, and the new wave of Meme hype based on this network has rekindled the long-dormant crypto market, with some bullish investors even viewing it as the start of a new industry cycle.

Last week, Robinhood's founder and CEO Vlad Tenev appeared on the Master Investor podcast. During the show, Vlad Tenev outlined Robinhood's history and path to success. He discussed everything from Meme stocks to Meme tokens, looked ahead to asset tokenization and the investment value of private equity markets, and emphasized that "retail investors are the real smart money."

The following is the full text of the conversation when Vlad Tenev appeared on the Master Investor podcast (edited for readability), compiled by Odaily.

Opening Remarks

Host: Welcome to the Master Investor podcast. I'm your host, Wilfred Frost. In this program, we engage in conversations with the world's most successful investors, business leaders, and political figures, sharing the experiences and insights 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 application that truly pioneered commission-free trading and has brought numerous industry innovations on that foundation.

Robinhood was founded in 2013 and went public in July 2021 with a market cap of around $32 billion. However, less than a year later in 2022, during a broader market correction, the company's stock price fell about 80%, shrinking its market cap to roughly $6 billion. Now, Robinhood has made a comeback, with a market cap nearing $100 billion (currently just above $90 billion), and assets under custody on the platform reaching $380 billion.

They're back, and stronger than ever. It's a great pleasure to welcome Robinhood CEO Vlad Tenev to Master Investor.

Vlad Tenev: I enjoyed that trip down memory lane.

Host: Which part did you enjoy more? The ride up, or...?

Vlad Tenev: I'd say it's now (laughs). Yeah, right now is the most interesting part.

History Revisited: The 2022 Correction

Host: Let's start with that major correction back then. This isn't just Robinhood's story; it's the story of the entire market.

You have a clear view of the behavior of almost all traders, especially retail traders. Before that market correction, which also impacted Robinhood's own stock price, did you see signs of a bubble in your customers' trading activity?

Vlad Tenev: Yes, I personally had my suspicions during the pandemic, though I wouldn't directly call it a "bubble."

If you recall, in 2020, the U.S. government began massive money printing, sending out stimulus checks directly to households. But at the same time, if you looked at various indicators predicting inflation levels, no one thought inflation would rise significantly.

For example, the long-term inflation expectations implied by the 10-year U.S. Treasury yield at the time were still around 2%. I was thinking, how is this possible? The government keeps printing money, but inflation isn't rising.

The government didn't invent a 'perpetual motion machine'; it can't defy economic laws. So, one of those assumptions had to break. Therefore, personally, what happened later wasn't really surprising, although it might have been a surprise for the broader market.

By late 2021, inflation started to pick up noticeably, eventually hitting multi-decade highs, higher than any point in the previous 30 years. And when you see inflation go from near zero to 9% or 10%, a policy response becomes inevitable – raising interest rates, tightening monetary policy.

In my view, this was almost unavoidable and quite predictable.

Host: So, can we simply put it down to the high inflation and subsequent interest rate hikes that led to the correction? Or were there signs of overvaluation beforehand?

I'm mainly referring to the Meme Stock mania. Looking back, shouldn't we have realized that these companies weren't profitable, yet their stock prices were doubling in a very short time?

Vlad Tenev: I think these things are fundamentally interconnected.

If you look at the timeline, the most famous round of Meme Stock mania happened in January 2021, just weeks after a massive fiscal stimulus package was rolled out in the U.S. We could see this clearly in Robinhood's data.

Every time the government sent out stimulus checks, we'd see a massive influx of funds into the market just days or weeks later. Looking back at Robinhood's massive growth during the pandemic, there were several important reasons.

First, people had almost nowhere to spend money. Almost all offline activities were shut down. Everyone was at home, so various digital activities – including investing in the stock market – became viable options.

Second, people had more time. They could learn about investing, follow YouTubers, and various financial content creators.

Also, interest rates were at zero. If you recall, in 2019, the Fed was raising rates, with the federal funds rate briefly above 2%. But in 2020, after COVID hit, the Fed quickly cut rates back to zero.

And on top of zero rates, multiple rounds of fiscal stimulus were layered on. All these factors combined to push the stock market up.

Of course, in March 2020, the U.S. stock market experienced a sharp crash. But it was a very short-lived crash, followed by a classic V-shaped recovery. If we hadn't had such rapid, large-scale fiscal stimulus and loose monetary policy, the outcome could have been very different.

Host: Interesting. I was at CNBC back then, and our ratings skyrocketed during that period. As you said, people had nothing else to do, so naturally, their attention turned to the capital markets.

Vlad Tenev: Exactly. Everything was closed down, except the markets.

Retail vs. Smart Money

Host: I started with this topic because I want to discuss another issue later – whether you see similarities between today's market and back then. But before we get to that, I'd like to touch on something else.

I've heard that your customers – largely retail investors, who form the core of Robinhood – have actually performed better in the market compared to institutions. Over the past few weeks, we've interviewed many guests who talked about "Smart Money" and "Dumb Money."

Now, more and more people believe that the real "Smart Money" is actually retail. Whether it was in October 2022, April 2025, or March 2026, they successfully bought the dip during market downturns. Does this trend still exist? Are your customers still seeing the market more clearly than others and willing to buy when prices are low?

Vlad Tenev: Absolutely, I've always believed this. Many times, so-called "Smart Money" can be a bit too clever for its own good, and that's not necessarily a good thing.

Institutional investing today has become increasingly indirect and abstract. Fund managers spend more time observing the macro environment, constantly adjusting portfolios based on various macro indicators. Often, they sell a stock for reasons that have nothing to do with that company's fundamentals.

For example, they might sell purely due to macro factors like tariffs. Tariffs force them to reallocate capital, leading to a seemingly counter-intuitive situation where they sell companies like Palantir, even if it might be completely unaffected by tariffs or could even benefit from them.

Retail investors, on the other hand, think much more simply. They buy and sell stocks because they believe a specific company will perform well in the future. Therefore, when faced with macro events like tariffs or interest rates, retail investors often show more resilience.

They focus on questions like, "How is this company doing?", "Do I like its products?", "Is revenue growing?", "Are profit margins improving?", "How's the Rule of 40?"

These are still relatively professional analyses, but they don't just dump all their stocks and move into fixed income because of a geopolitical event like the Russia-Ukraine conflict, which is what many institutional investors would do.

Is the Current Stock Market Similar to 2022?

Host: Now, I'd like to talk specifically about Robinhood. As mentioned, you went public in July 2021, shortly after which the entire capital market entered a very difficult period.

Do you feel like you just caught the last train out? Because for the next few years, the capital market wasn't very friendly to IPOs like Robinhood's.

Vlad Tenev: Yes. The window for the IPO market was essentially closed for several years. Since we later launched the IPO Access product, we had a first-hand view of the entire IPO market.

It took a few years before a crack appeared. The IPOs of ARM and Instacart were arguably the first to reopen the market. I think that was in 2023. In a way, they were precursors to the subsequent full market recovery.

True full reopening of the IPO market didn't happen until last year.

Host: The reason I went on this tangent is to ask: Do you see a sense of déjà vu with SpaceX's public listing now? Just like Robinhood back then – going public right before the market shut down. If you had waited any longer, you might not have had the chance, as the market then experienced two years of downturn.

Now SpaceX is public, and everyone is watching to see if all these other companies can follow. OpenAI has indicated it might hold off on trying to go public for now. Does this evoke a bit of that past feeling? What are your thoughts on the current market dynamics compared to back then?

Vlad Tenev: Right now, everyone is discussing the question: "Are we in an AI bubble?"

I think what complicates this question is that a huge number of companies are pouring massive amounts of money into AI, and the AI industry has already formed relatively clear business models.

These foundation model companies sell tokens to enterprise clients and individual users. OpenAI also has a sizable subscription business. So, unlike many past bubbles, AI companies today have real business models and growing revenue.

The real question has shifted to: Will the enterprises paying heavily for AI move from this "willing to learn, not focusing on cost" phase towards a phase with a much sharper focus on return on investment (ROI)? If they start measuring ROI strictly, will revenue from each client continue to grow in the future, or will it decline?

On the other hand, another important factor is that a large number of enterprises and consumers have yet to truly start using AI. For example, look at Claude Code. Its user base is in the tens of millions, far from hundreds of millions or billions. Therefore, there's still a very long growth runway in the market. Because of this, even with real revenue today, I still feel the entire AI industry is in a very early stage.

So, I think this is different from the logic used in the past to judge IPO timing. Another thing I've come to realize over the years is that, no matter the era, we always feel we're at a very important historical juncture, that what's happening is unprecedented, and we're on the verge of some massive transformation.

But looking back, you see that these market cycles are actually getting shorter. The IPO window closed at the end of 2021, and by 2023, it was starting to reopen. If you zoom out, you see it's just a sinusoidal cycle.

No phase is permanent. Even if the IPO window closes temporarily, it doesn't necessarily mean it will take a decade to reopen.

Host: Based on your observation of customer behavior, do you see any warning signs similar to the 2022 market correction today?

Of course, SpaceX is clearly not a Meme Stock. It's a multi-trillion dollar company. But some might draw an analogy, saying it's also being pushed to extremely high valuations before being sufficiently profitable, and could correct again in the future.

I'm not comparing it to GameStop. My question is: Do you see any signs in your customers' trading behavior that remind you of the period before the 2020, 2021 highs, and the subsequent 2022 correction?

Vlad Tenev: I believe the companies our customers invest in today are overwhelmingly large enterprises with real profitability, standing at the forefront of their respective industries.

You mentioned SpaceX, but also Nvidia, Tesla, and other chip companies. The entire chip sector has performed quite well recently, and our clients are very interested in it.

So, I think the biggest difference between today and 2020/2021 lies in what I'd call a "nostalgia" investment sentiment back then. Many of Robinhood's early users were Millennials. They were investing in companies they felt were "unfairly targeted" by pandemic-era policies – retailers like GameStop, movie theater chains, airlines, car rental companies. Even under the rosiest of scenarios, it was hard to argue these companies were at the cutting edge of tech innovation. In fact, influenced by market conditions, the pandemic, and trends like online entertainment and streaming, they were somewhat being disrupted by the times.

Today is completely different. Our customers now are mostly investing in innovative companies that are actively disrupting industries, standing at the very forefront. Of course, people can debate P/E ratios and other valuation metrics, but I think there's little argument that these companies are genuinely changing the world.

The Founding Story: Path to Success

Host: Let's bring the focus back to Robinhood. Before we talk about Robinhood today and its future, I want to look back.

In hindsight, what do you think was the fundamental reason Robinhood was able to quickly capture the market and gain user recognition in its early days? I know zero-commission trading was a big part of it.

Vlad Tenev: I think it was the combination of three factors that made the Robinhood product resonate so broadly.

First, as you mentioned, commission-free trading. Back then, other brokerages charged $7 to $10 per trade. We were completely free. So, we not only tapped into a new user base – primarily younger people who didn't have one or two thousand dollars to start investing – but we also attracted a large number of active traders to the platform. For these active traders, trading maybe a hundred or even a thousand times a month, even if our platform had some shortcomings in features or tools compared to professional brokerages, they still found it worthwhile to use Robinhood because the economic benefit of zero commissions was so significant. So, at least on the business model, we won the competition.

Second, besides pioneering zero-commission trading and establishing what is now the industry standard business model, we also led the charge in mobile trading. Robinhood was arguably the pioneer driving the entire brokerage industry's shift to mobile. Before Robinhood, while some brokerages had mobile apps, they were treated as an afterthought, an adjunct product.

We bet that mobile internet was the future and that people would primarily manage their financial lives through their phones. Not just because phones are more portable, but because the mobile platform itself offers many practical advantages. So, we designed our product from the ground up for mobile. I believe Robinhood truly created the 'mobile brokerage' industry and pushed it to become the dominant form in today's market. Robinhood has always been the leader in this space.

Third, and I think this is very important, are the values that Robinhood represents. If we go back to the 2008 global financial crisis, many of our users were at a crucial life stage. I graduated college in 2008 and entered graduate school. My co-founder, Baiju, had just started working in my first month of grad school