No Priors: Artificial Intelligence | Technology | Startups
00:34:34 · Sarah Guo, Vlad Tenev
[00:34:34] S1: It's not my core code money [00:34:35] S0: for you. Yes. So it's sandboxed. It's sandboxed, maybe not quite air gapped, but pretty close. And we built a lot of the, we refined a lot of the infrastructure for the sandboxing and the harness in house at Robinhood. Yeah, so far I think that it's not just a huge percentage of the market. The reason I don't think, I don't see any clear massive overhauls necessary is that high frequency trading has been a thing for a really long time. I mean, markets went fully electronic about twenty years ago. And so everything from the exchanges to a lot of the brokers have sort of conformed to this new reality of most of the workflows being algorithmic trading that happens in data centers in New Jersey, rather than what a lot of people still think happens, which is have paper tickets Sure. Floor traders in a trading pit. So don't think, it's not clear to me that anything fundamental has to change with regulation, but as it gets bigger, which I don't doubt it will, we might run into special cases for which we need more regulatory clarity or... [00:35:53] S1: Yeah, I was more... From an infrastructure perspective, if you just use coding as a proxy, I did not, maybe we all should have, but I think it was not obvious that CICD was going to completely fall over, like, in the face of orders of magnitude growth in code generation. [00:36:14] S0: Oh, yeah. [00:36:15] S1: And so that that was my question, which is like, yes, of course, we've had HFT. Yeah. But if, like, everybody is a high frequency trader, that feels like new load.
00:36:24 · Vlad Tenev
[00:36:24] S0: Yeah. I mean, there's a couple of different layers in the stack. Right? And we we should expect our on chain stack is slightly different, that already has MCPs, but you have our on chain tools, which a lot of it is, you know, I talked about Robinhood Chain being the best chain for real world assets, also it's the best chain for AI agents. So we're seeing a lot of Agentic Trading there. On our CFi, centralized offerings, you know, we have a lot of end to end control over the entire system, right? We have our databases, we have our code that the strategies are running on, the sandboxes, we build a lot of those tools. We have to optimize all of that, but once it gets through our system, you get to places like the Algo, the Market Makers, which are all extremely sophisticated software shops. I mean you're talking Citadel, Jane Street, Jump Trading, these are like low latency, high frequency folks, so I'm not so worried about them scaling to meet the demand. And then you have the exchanges, and the exchanges, because of pressure from HFTs and algo trading, have really optimized their APIs to handle huge volumes. But that said, I think that we're still at a low percentage of the total trading as Agentic. So I think we'll have some warning. Mean, we'll see it increasing and I don't think that we're gonna be at the point imminently where Agentic mediated trades are you know, a double digit percentage of the activity, I think we'll have some time.
00:38:14 · Sarah Guo, Vlad Tenev
[00:38:14] S1: Given you're such a strong believer in ownership and then democratized ownership as important to societal stability, and also, like, just opportunity for people. I think there's a sense that the AI revolution is not a broadly owned thing. Do you have an idea of, know, what the solutions here might be? And maybe you can talk about Trump accounts as well here. [00:38:36] S0: Yeah. And I think we identified this problem last year. You know, it's a couple of things, right? First, all of the major innovative AI companies are private. I mean, with some exceptions. You can look at Nvidia and Google, but you know, yeah, but those companies were already quite big before they really got into this new phase of AI. So if you wanted to invest in a large language model a couple years ago and you wanted exposure to OpenAI or Anthropic, you're basically out of luck as an individual investor. And I think there's a lot of reasons for that. One is private markets have gotten, it's gotten really easy for high growth successful companies to raise money in the private markets. You know, they basically have [00:39:28] S1: At massive scale, yes.
00:39:29 · Vlad Tenev
[00:39:29] S0: Massive scale, and that didn't used to be the case. You know, back in the 80s, a company like Microsoft, even in the 90s with Amazon, they went public at valuations in the hundreds of millions. So individual investors that got in during the public offering could make a 1000x. Now if you have an AI lab that goes public at a trillion or 2,000,000,000,000, in order for an individual investor at IPO to make that type of return, they'd have to get into the quadrillions, right? Crazy. I think it's unlikely, basically. Maybe it could happen, but I think it's gonna be much tougher, and instead, you know, the gains keep getting concentrated into a smaller and smaller group of venture capitalists or institutional investors. And then we're wondering, well, why are people upset about data centers? Well, I mean, if you think about it, if I'm an individual, I don't benefit economically from any of this activity. In fact, you could say, well, it's threatening my livelihood, my job, it's polluting my neighborhood, they're making all this noise. And yet, juxtapose AI with something like crypto. Crypto has not been, it's not like everyone trading crypto makes money, you know, and right now Bitcoin is, what is it, 85,000. If you bought at 120,000 a couple of months ago, you're down. $20.22 and $20.23 were rough for the crypto industry, to say the least. A lot of people lost money in those years, but yet in 2024, they came out in full force and swung the election, I think in a meaningful way. And if there's even a hint of regulatory overreach for crypto, you have this army of people that are just blasting social media and messaging their congressman or woman and just fighting every inch of it, and I think a big part of it is crypto is distributed broad ownership by individuals from the beginning, and it's almost institutions are coming in late, whereas AI is the difference. So what do we do about it? Well, we launched two things. We believe that everyone should be able to invest in private companies, and I can't convince companies to go public earlier too effectively, No,
00:41:58 · Sarah Guo
[00:41:58] S1: no can I?
00:41:59 · Vlad Tenev
[00:41:59] S0: Even though I try doing that sometimes, like we do have our IPO, I mean we're an underwriter, we're active in that pipeline, but individual investors should benefit from private companies and be a huge shareholder. That's really the vision behind Robinhood Ventures. How can we make it so that it's an anomaly to not have individual retail investors as a big constituent of your seed and series A cap table? So they should actually be at the earliest possible stage. And so Robinhood Ventures Fund One, we actually have an innovative structure for this. You can kind of think of it as a publicly traded venture capital firm. And so what we did was we used our IPO channel, which were the largest retail channel for IPOs, and we use that to raise capital in an IPO from Robinhood customers, individual retail, and then we use that to invest in startups. And then the funds are publicly traded on the New York Stock Exchange, so they trade just like a stock. And so Robinhood Ventures Fund one was late stage privates. OpenAI is in that fund, you have a couple of other companies, fintechs, a lot of AI companies, 11, Crusoe we recently announced. So that was ultra late stage, and then we asked ourselves, well, can we actually go to the extreme and give people exposure to seed in series A? And that's where Robinhood Ventures Fund II, the idea came to partner with YC and use a structure to give people exposure to the earliest possible stage where the risk is highest but the opportunity is also greatest, and that's the fund that Rich Aberman is running for us. And then we have tokenization of privates, which solves that problem in a different way, but right now for outside of The US. And the North Star is can we get a private company to be real time tradable 20 fourseven in fractional quantities just like a stock or a crypto? You should be able to just trade anthropic 20 fourseven in low dollar amounts with like some degree of high quality ownership, at least as good as owning LP interest in an SPB, right? And that should be available to everyone. So that requires pushing on a bunch of things in The US, accredited investor rules being one of them, but, yeah, we're highly motivated to lead that and make that happen.