Robinhood CEO Responds to Accusations of “Gamifying” Wall Street
Robinhood CEO, Vlad Tenev, has faced criticism from both the public and private sector over the last weeks. The Robinhood trading app has been accused of gamifying a heavily regulated stock trading industry and is now subject to potential government scrutiny in the coming months. Watch below to see how Tenev responds to these accusations.
Tenev: There’s the phrase that there’s some decades where nothing happens and then some weeks when decades happen, which I think is representative of what we’ve been through at Robinhood. I think that not just Robinhood, the entire industry has seen investing go from something that’s very niche. I mean, it’s something that, you know, you hear about on TV, but a relatively small number of people were actually interested in it. And now you’re seeing investing very much be a part of the cultural zeitgeist. I mean, people are talking about it on social media. We are having congressional hearings about it. And I think anything entering the cultural zeitgeist anything new like that, there’s bound to be some confusion. There’s bound to be some stress. And I think I just have to keep it in perspective for myself that this is kind of what I signed up for. And any time you’re causing change in society and kind of upending the status quo, it’s probably not going to be the most comfortable process.
Host: What do you say to critics who say you’re democratizing addiction, you’re glorifying gambling?
Tenev: I reject the idea that investing in the US capital markets is gambling. I think we have a problem in this country, since the end of World War two, more and more of the stock, the corporate stocks in America have been owned by advisors or other institutions or intermediaries. So at the end of World War two, the majority of stocks were actually held by households. And that’s been going down over time. And I think at the same time, you’ve seen really, really high concerns about income inequality and wealth inequality. And these concerns threaten the fabric of our society. And I think people agree that that’s a problem. And we’ve got a product here that has real potential to curb that. So I think any attempt to prevent individuals from accessing the markets directly is just poorly directed. I think, if anything, we should be looking at how to encourage individuals from to invest in the markets directly and make it even easier and remove the remaining barriers that are in the way.
Host: That said, Gary Gensler, President Biden’s pick to run the SEC, has said he’s going to address the gamification of investing as one of his top priorities. What will that mean for Robinhood?
Tenev: Well, I think, first of all, we’re excited to work with the incoming administration to clarify some of these things and we welcome people looking into it. I think what they’ll find is gamification is poorly defined. It’s not happening on Robinhood. I think people just want to invest in stocks. And regardless of whether they do it on Robinhood or any of the other brokers with zero commissions and low account minimums, that’s now possible.
Host: Now we’re seeing a prolonged sell off in the markets. I’ve seen a bunch of people tweeting screenshots of their Robinhood notifications. It was a bloodbath for a lot of people, including many of your customers, who are only used to things going up. If there’s a correction, how worried are you about your customers hurting and if your customers are hurting on a large scale does that hurt Robinhood? We we definitely want to make sure we align ourselves with long term customer outcomes, and we’ve been saying the entire time that investing is a habit, it’s a skill. We encourage people to get started early, but also build up these habits over a long period of time. And I’m personally a huge believer in long term investing. And what our product allows customers to do is set up recurring investments where you can buy a stock and every time you get a paycheck or even more frequently deposit and buy a recurring investment over time. And that way you can build up a diversified portfolio. So I think a lot of the shorter term trading makes its way into the public discourse because it’s more interesting and there’s more to talk about than someone just building up a diversified portfolio over time. But that’s how most of our customers use our products. Most of our customers aren’t buying and selling on a daily basis. They’re building up portfolios and and largely doing buy and hold activities. And that’s that’s, I think, how the bulk of people will continue to invest and how most people will think about investing in the future.
*Bloomberg contributed to this content
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