No Priors: Artificial Intelligence | Technology | Startups
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.
00:44:38 · Sarah Guo, Vlad Tenev
[00:44:38] S1: That was my question for you, which is, you know, if you are, for example, a venture capitalist with a portfolio you think is going to make money in privates, then, you know, some people will have a choice of LPs. There's institutions. There's your friends you can make money for. Obviously, there are rules around, you know, QP and accreditation, around taking retail interest. Your view is clearly like some of those rules need to be updated. [00:45:06] S0: Yeah, you know, and there was an initiative by the SEC, it was announced last week, to allow a separate path. So they directed FINRA, which is the primary broker dealer regulator, to create an exam, an accreditation exam, where you can go as an individual and get accredited by taking a two hour exam at a testing facility. [00:45:33] S1: Versus it being asset based. [00:45:35] S0: Versus it being asset based, or there's also, you can be affiliated, you can have a Series seven, which is an affiliation with a financial firm licensure. But yeah, so it's a knowledge based exam, and I think it's definitely a positive step. I think they're doing stuff, but yeah, I think the goal would be to make it lower friction, because how many people are gonna go and sit for an exam at a testing facility? So I think more work needs to be done, and we're gonna be at the forefront of continuing to push for that. [00:46:07] S1: I think the main argument against such, you know, evolution of rules would be some sense of like, you know, protection against fraud and paternalism there. How do you think about that?
00:46:07 · Sarah Guo, Vlad Tenev
[00:46:07] S1: I think the main argument against such, you know, evolution of rules would be some sense of like, you know, protection against fraud and paternalism there. How do you think about that? [00:46:18] S0: For our customers, you know, we spend a lot of time talking to them, figuring out what they care about, and one of the things they care about most that they agree with is the statement that I should be in charge of my money, and nobody should tell me how to spend or invest my money. When we say to our customers, do you agree with this? I mean, it's overwhelming agreement. So not to say that they'll personally wanna do every type of risky speculative investment, but they don't think that it's the government's place or anyone's place to tell them what to do with their money broadly. Now of course, I think that people should be absolutely clear on what these products are, and so we should make sure to tell you what it is, give you as much information as possible. But I think about this, am I gonna tell you not to invest in the hot IPO? IPOs are risky, for sure. Meme coins even. Meme coins have like perfect regulatory clarity. If you wanna buy a meme coin, you are free to do so, and the SEC even wrote a letter saying these are not securities, they're collectibles, you know, it's clear clear the way. So I it's silly to, from a couple of different angles, not the least of which is, you know, meme coins are completely fine in any amount, but private companies... [00:47:48] S1: Is not rational from a just like pure risk orientation to restrict private companies.